The Hongkong and Shanghai Banking Corporation headquarters in Shanghai. The building is the centerpiece of the Bund, Shanghai’s famous waterside promenade.
The Hongkong (spelled as one word) and Shanghai Banking Corporation has been a leading foreign bank in China since 1865. HSBC was a quasi-official bank during the later Qing dynasty and lent money to the Qing government for political indemnities, national railways, and military campaigns by using China’s customs revenues as collateral. HSBC is rebuilding its network following China’s banking reform in recent decades.
The Hongkong and Shanghai Banking Corporation (HSBC) was established in Hong Kong in 1865 by a group of shipping companies, led by Thomas Sutherland of the Peninsular & Oriental Steamship Company and Francis Chomley of Dent & Company. The new bank (which spells Hongkong as one word) sought to combine banking with the tremendous business opportunities in trade and shipping between Hong Kong and Shanghai.
HSBC established its Shanghai branch on 3 April 1865, with the Chinese characters of the words Huifeng Yinhang ????, meaning “abundant remittances.” David MacLean, the first branch manager, had a close friendship with Robert Hart, inspector-general of Imperial Maritime Customs of China. Subsequently, Imperial Maritime Customs deposited all its revenues with the HSBC, and the bank established branches where Imperial Maritime Customs had local offices.
HSBC became a quasi-official bank in modern China, primarily because of the fact that the decaying Qing dynasty (1644–1912) government had no official bank before the end of the nineteenth century. The Qing government frequently borrowed money from the bank for political indemnities, national railways, and even for military campaigns by using customs revenues as earnest money or as collateral. As the most important and influential foreign bank, the Hongkong and Shanghai Banking Corporation issued its bank notes in various denominations in China. Acting as a proxy for the Chinese government in banking and finance, the bank utilized access to London’s financial markets to sell bond certificates. Its foreign exchange transactions often accounted for 60 to 70 percent of total daily transactions in Shanghai financial markets. For more than a half century China’s financial markets set their daily foreign exchange rates based on Shanghai, and the Shanghai interest rates were set by the Hongkong and Shanghai Banking Corporation.
During the Pacific War (1941–1945) HSBC was forced by the Japanese military to suspend business. After the establishment of the People’s Republic of China in 1949, only the Shanghai branch remained, and its role was limited to inward remittance and export bills until economic reform in 1978.
HSBC began building its new network in China in the 1980s, establishing branches in major cities and quickly becoming the largest foreign bank in China. In 1991 HSBC Holdings was established to act as a parent company to HSBC Group, and in 2000 HSBC moved its China headquarters from Hong Kong to Shanghai. Currently the headquarters is located in its own HSBC Tower in Pudong. From 2001 to 2004 HSBC acted as a strategic partner to obtain a 19.9 percent stake of the Bank of Communications and about an 8 percent stake in the Bank of Shanghai. In February 2007 HSBC applied for its license from the Chinese Banking Regulatory Committee to become a registered foreign bank in China.
Further Reading
Collis, M. (1965). Wayfoong: The Hongkong and Shanghai Banking Corporation. London: Faber and Faber.
Ji Zhaojin. (2003). A history of modern Shanghai banking: The rise and decline of China’s finance capitalism. New York: M. E. Sharpe.
King, F. H. H. (1987). The history of the Hongkong and Shanghai Banking Corporation. Cambridge, U.K.: Cambridge University Press.
Wang Jingyu (1999). Waiguo Ziben zai Jindai Zhongguo de Jinrong Huodong. (Foreign capital in modern China’s financial activities). Beijing: Renmin Chubanshe.
Source: Ji, Zhaojin. (2009). Hongkong and Shanghai Banking Corporation (HSBC). In Linsun Cheng, et al. (Eds.), Berkshire Encyclopedia of China, pp. 1058–1059. Great Barrington, MA: Berkshire Publishing.
Hongkong and Shanghai Banking Corporation (HSBC) (Xi?ngg?ng-Shàngh?i Huìf?ng Yínháng ????????)|Xi?ngg?ng-Shàngh?i Huìf?ng Yínháng ???????? (Hongkong and Shanghai Banking Corporation (HSBC))
