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The Hongkong and Shanghai Banking Corporation, or Hong Kong Bank as it is more generally known, is one of the world’s biggest and most successful financial institutions, with operations in more than 100 countries. In the years since it was placed under British administration in 1842, Hong Kong has developed into the most active business city on the Asian continent. Taking full use of its position as the dominant “home-town” bank in the area and as a natural middleman between commercial interests from politically hostile countries in the region, the Hong Kong Bank has achieved great success. Few other institutions have the same level of influence in the “China market” as the Hong Kong Bank (in fact, the bank’s Shanghai branch has been operating continuously since 1865), and even fewer have the same level of power in the Hong Kong market.

A Brief History

After a period of rapid development, Hong Kong emerged as a significant commercial town on the coast of the poor south China plain in the early 1860s. Tea, opium, and silk were traded by Western economic interests under the cover of British firearms. The unexpected entry of opportunists from India and London in the mid-19th century was despised by the hangs, as these interests were referred to at the time.

It was upsetting to local taipans (“big bosses”) when they learned that a group of bankers from Bombay wanted to create a “Bank of China” in Hong Kong and that only a restricted number of shares would be available to local investors. An answer came from Hong Kong Superintendent Thomas Sutherland, who created a “sound Scottish banking principles” prospectus in response to criticism. He rallied together a group of local business leaders and, in only a few days, he had founded a banking cooperative with a capital of HK$5 million. When the representative from the “Bank of China” arrived in Hong Kong a few weeks later, he discovered that there was no interest in his bank, its shares, or even its directorships.

The Hongkong and Shanghai Banking Company began operations in Hong Kong on March 3, 1865, and in Shanghai on April 3, 1865, before establishing operations in London a few months later. No representation was provided by the two biggest corporations in Hong Kong, Jardine Matheson and the American company Russell & Company. The overwhelmingly positive reception to the bank from Western investors and compradors (Chinese business agents), on the other hand, prompted both to rethink and eventually join.

The effects of WWI

The bank, which is still prevalent both by the Germans and British, was profoundly split during World War I. German members of the business’s board of directors, who were described in the media as representing “hostile interests,” subsequently resigned, thereby putting a stop to German involvement in the corporation for the foreseeable future. Despite this, the bank’s Hamburg branch stayed operating during World War II and beyond.

Because of the increasing silver price after World War II, the bank decided to issue rights to fund an expansion. A. G. Stephen, the company’s chief operating officer, presided over the development of additional facilities in Hong Kong, Bangkok, Manila, and, most notably, Shanghai, in which a new office was established in 1923. When Russian uprisings finished their consolidation of power over Siberia in 1924, they were compelled to liquidate a branch office in Vladivostok, which had been operating since 1918.

Aftermath

Morse started preparing for the restoration of Hong Kong long before the conclusion of the war, and the bank played a significant part in that effort. Except for Hamburg, which had stayed open throughout the war, all the company’s branches were reopened, including ones in Japan. Chinese nationalist Chiang Kai-shek and communist Mao Zedong had allied during World War II, but the conflict had devolved into civil war by 1947. Inflation spiked and public unrest grew as a direct result.

The nationalists had fled to Taiwan by October 1949, when the communists had taken control of the mainland. Industrialists evacuated China, mainly Shanghai, for Hong Kong in 1950 after the communists unexpectedly reversed a call for collaboration with capitalists. Shanghai, Beijing, Tianjin and Shantou all had branches until 1955 when only the Shanghai branch remained open. As far as I could tell, Hong Kong was the chosen location for all Chinese businesses.

Several Interesting Facts About HSBC

• Even though HSBC is regulated and registered, the Hong Kong Legislative Council and the Hong Kong Monetary Authority first recognised it as such in 1989
• The acquisition of the Midland Bank resulted in the relocation of HSBC’s headquarters from Hong Kong to London in 1992, which was completed in 1993
• The fact that it acts as HSBC’s regional headquarters for the Asia Pacific region means that this HSBC subsidiary is in charge of reporting on the bank’s operations in countries in the South East and South Asian regions. For all of the reasons outlined above, HSBC is typically considered a dependable banking institution in the financial industry
• Before relocating to London, HSBC Holdings PLC was headquartered in Hong Kong’s Central district. Lord Forster had designed and built the edifice, which was at the time the most expensive in terms of usable floor area per dollar spent

Conclusion

A “non-extractive” economic strategy in Hong Kong, combined with the entrepreneurial talents of industrialists from Shanghai and a labour force boosted by thousands of mainland migrants, resulted in an economic powerhouse. It supported hundreds of new businesses that enabled the colony to achieve export-led development unmatched in its history.