HSBC does not seem happy in the United States nor in the United Kingdom. Financial markets and customer debt are under pressure, while repossessions and foreclosures are at an all-time high. HSBC once bragged of making profits in emerging markets. Perhaps that will change as well. ‘Amid signs of trouble in emerging economies like Argentina and South Korea, there is growing concern that HSBC will take a hit,’ said Patrick Shum, strategist with Karl Thomson Securities in Hong Kong.
What remains is for HSBC to find a niche or flagship. Islamic finance and the Gulf States might be an answer, but HSBC must tread softly for fear of alienating customers around the world. OPEC, oil prices, and radical religious sects are sometimes synonymous with Islam. Although radicals may be on the wrong side of what is otherwise a peaceful religion, they would pose a problem for any company aligning themselves with Arab nations while turning their back on parts of the world firmly ingrained in the company’s history.
That view makes one assumption where HSBC is concerned. The assumption is that many people do not know their credit card or mortgage is a product of the Hong Kong Shanghai Bank. People are expected to assume HSBC stands for HSBC. Such is not the case, although the bank moved to London years ago. Regardless, HSBC has strong ties in China. HSBC also has strong ties to Malaysia.
Unfortunately what started in the United States as the subprime crisis is now a full-blown worldwide financial crisis. Problems in the U.K. parallel problems seen in the United States. There is no doubt in anyone’s mind that HSBC was a key player in U.S. subprime. While it is argued that HSBC and others served a market and provided valuable services, what remains to be seen is what will happen to HSBC Finance, which once was Household International.
Thus it can be said that HSBC must turn elsewhere, as they once turned to emerging markets. Business policy dictates that a stable market with plenty of ready cash would be a strong foundation. A market should be relatively untouched by the subprime crisis. Therefore we predict if an Arab suddenly stopping walking, HSBC employees might get broken noses. (You can visualize what we mean by that.) A little brown-nosing goes a long way with some, and not very far with others.
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