Today's LIBOR Rates
1 M |
0.31563 |
 |
3 M |
0.47500 |
|
6 M |
0.68794 |
|
1 YR |
1.06438 |
|
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The Banks Behind LIBOR
HSBC
April 17, 2009
“Contributor banks” selected by the British Bankers’ Association (BBA) report their daily interbank lending rates for different maturities and currencies, and from these data the BBA computes the LIBOR indices. This is an overview of one of those contributor banks.
HBSC Holdings plc is a contributor for nine of LIBOR’s 10 monitored currencies, including the US Dollar, the Pound Sterling, the Euro, and the Yen. The institution bills itself as “The World’s Local Bank” and is truly international in its origins and development. Based in London, it was incorporated in its modern form in 1993, with roots going back to the 1860s. Forbes ranks HBSC as the world’s largest banking concern in terms of market value and the world’s sixth largest company overall, with 9,500 offices in over 80 countries.
HSBC began as The Hongkong and Shanghai Banking Corporation in 1865. Scotsman Thomas Southerland founded the bank in Hong Kong in response to the need for capital to finance increasing trade between China and Europe. The bank expanded across Asia during the ensuring decades, opening what would be the first bank in Thailand’s in 1888, and establishing branches in Japan and the Philippines. The Hongkong and Shanghai Banking Corporation oversaw fiscal matters for the British Government in the region, acting the Hong Kong government’s banker and managing colonial accounts in Singapore, Malaysia, Japan and China.
As World War II loomed, the bank moved its head office to London; however, successive chief managers still in Asia were taken prisoner by the Japanese and died in captivity. Central operations moved back to Hong Kong in 1946. Postwar, the bank expanded globally, forming The Hongkong and Shanghai Banking Corporation of California and acquiring banks in the Mideast and India.
The HBSC group as it is known today began to take shape in the 1980s as worldwide acquisitions and expansion continued, including formation of subsidiaries in Canada and Australia and purchase of Midland Marine Bank in the United States. In the mid 1980s, the bank opened its new Hong Kong headquarters designed by the renowned architect Sir Norman Foster. A technological marvel, the approximately 600 foot-tall structure was constructed of massive prefabricated modules made in Glasgow and shipped to Hong Kong.
HBSC Holdings was launched in the early 1990s as the parent for the original bank and holding company to the growing roster of purchased institutions, which included South American banks Banco Bamerindus and Roberts SA de Inversiones, New York’s Republic National Bank, and Crédit Commercial de France. A major impetus for relocation to London was the pending handover of Hong Kong to China.
HBSC would find itself at the center of the subprime lending crisis as it acquired America’s Household Finance Corporation (HFC). The now-rebranded HBSC Finance would become the second largest subprime lender in the nation. After a $62 billion loss, the division’s branch network was shut down in 2009. However, the overall HBSC group has been known for prudence and profitability, allowing it to weather the global economic crisis and financial industry upheavals better than many rivals. Current Group Chairman Stephen Green assumed his position in 2006, the culmination of a career that began with the company in 1982. Mr. Green is also Honorary Chairman of the British Bankers’ Association, the trade organization responsible for the LIBOR index.
The accuracy and relevance of LIBOR rests on its contributor banks. With HSBC, LIBOR has a constituent that facilitated the earliest manifestations of the global economy during the Industrial Age of the 1800s. HSBC combines ambitious international growth with a reputation for conservative management practices. In business during three centuries, it remains a stalwart of the banking industry.