HSBC Plans Expansion Into Emerging Markets

by Phillip Morton, Investors Offshore.com

25 October 2005

UK bank HSBC Holdings PLC is planning to expand its consumer credit business into some of the world's emerging markets as it strives to take on established rivals in the market, such as Citibank, according to the Wall Street Journal.

"The big theme I believe over the next few years in consumer finance is the portability of our model" into markets starved for credit cards and loans, HSBC Group Chief Executive Stephen Green, told the WSJ in an interview published Monday.

"Any analysis of the demographics of emerging markets tells you that consumer finance is going to be an important part, and a rapidly growing part, of the financial-services spectrum for a long time to come," he went on to observe.

Mr Green revealed that the bank's new focus will be placed upon the market for consumer finance in North and South America, and Eastern Europe, specifically, Brazil, Mexico and Turkey.

There will also be a continued emphasis on its Asian business. While HSBC has had a long association with Hong Kong, the bank is planning to increase its presence in China, where it already owns a 19.9% stake in the Bank of Communications. Mr Green stated that HSBC is particularly interested in the market for credit cards in China, which has a rapidly growing and prosperous middle class.

Mr Green acknowledged that the expansion of HSBC's activities in the consumer finance market is likely to pit the bank against long established competitors in the sector, such as Citigroup, although the HSBC chief executive appeared unfazed by this prospect.

"You've always, or almost always, got major international players like Citi and often very respected domestic ones as well," he noted.

However, according to the report, analysts have suggested that HSBC may have to make additional acquisitions in the United States in order to increase its deposit base and finance its foray into the international consumer credit market.

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