How a Hong Kong trade bank became HSBC, a London giant built on takeovers
HSBC began in 1865 in Hong Kong, founded by merchants who needed a bank to finance trade between China, India and Europe, much of it in opium. Its first home was chosen partly for its excellent feng shui. Today the group is based in London and ranks among the world's biggest banks.
The founder, Thomas Sutherland of the P&O shipping line, wanted a bank run on sound Scottish principles. It opened on 3 March 1865 with HK$5 million in capital, added a Shanghai branch within weeks and was incorporated as the Hongkong and Shanghai Banking Corporation in 1866. Under Thomas Jackson, chief manager for 26 years from 1876, it became Asia's leading bank, and its banknotes displaced silver taels across a turbulent region.
The pivot to Britain came ahead of Hong Kong's handover to China. In 1991 a dormant English shelf company became HSBC Holdings, the new parent, and in 1992 it bought Midland Bank, giving it a big domestic presence in the UK. A buying spree followed: Brazil's Banco Bamerindus for $1 billion in 1997, a $10.3 billion deal for New York's Republic National Bank in 1999, and France's Crédit Commercial de France in 2000.
The costliest move was the 2002 purchase of Household Finance, a US subprime lender, for US$15.5 billion. One banking magazine thought it might be the deal of the decade. Instead, in 2007 HSBC became the first major bank to report subprime losses, writing down $10.5 billion, and in 2009 it closed most of the unit's branches with nearly 6,000 jobs lost. Its chairman admitted the bank wished it had never made the acquisition. Around the same period, investigations confirmed it had laundered money for Mexico's Sinaloa Cartel.
It remained financially strong through the crisis, moving £750 million to London within hours when regulators demanded more capital. By 2026 it held $3.212 trillion in assets, second in Europe, serving around 39 million customers in 57 countries and territories.
Source: HSBC
