Page 14 - HSBC (D) Teaching Note

Although HSBC emerged from the financial crisis in a
relatively strong position, compared with many of its

competitors who had to resort to government bailouts, it
failed to capitalise on its position. For the seven years to

2018 strategic leadership had spent much of its time

trying to repair the damage from a series of previous

scandals, many of which were associated with the

acquisitions not made on their watch.

The question is one of how much did this fire fighting

deflect from achieving a clear strategic focus?

For Gulliver, who inherited a company which prior to his

stewardship, pursued a strategy of growth by acquisition,

the environment was radically different. Legislation

placed greater onus on separating retail and investment

businesses with a stronger need for fiduciary compliance.

Acquisition had become a less attractive option rather

efficiency and effectiveness, which had been lacking in

the structure and processes of the organisation prior to
Gulliver was called for.

Growth was in the far east where historically HSBC was

strong. Its dilemma was that two thirds of its capital was

in the U.S. and Europe where interest rates were low with

the inevitable detrimental impact on earnings and

returns.

Gulliver’s response to the crises confronting HSBC post

2008 was to put the bank back into a strong business and

capital position delivering earnings growth by

restructuring the bank, selling more than 100 businesses