Do you ever research a subject just because you can? Sometimes you find an unusual animal you want to know more about. Or sometimes you start wondering about the origins of a business or institution.
Recently I dove into some British history and came across information about Sir Thomas Sutherland and his role in founding The Hongkong and Shanghai Banking Corporation (HSBC).
The rise of this bank took place in the years before our own Civil War. I love history, so please read on to find out more about HSBC history.
The First Opium War
Chinese silk, tea, and porcelain were in high demand in Europe during the 18th and 19th centuries. At the same time, The Chinese had little interest in European goods.
Since China would only accept silver for payment for its European exports, silver was flowing into China and staying there. China also restricted European trade to a single port, thus denying any access to China’s interior.
To balance the flow of silver, the British East India Company began selling its India-grown opium to independent merchants, who then smuggled it into China in exchange for silver. This action alarmed the Chinese, who saw less incoming silver and more opium addicts.
The Treaty of Nanking
In 1939, China’s Guangdong emperor (r. 1821–50) oversaw a court that had for years debated the merits of opium prohibition versus the drug’s legalization. That year he decided for prohibition and sent his Imperial Commissioner Lin Zexu to Canton to end the opium trade in China for good.
Lin seized over 2 million pounds of the substance, offered no payment for it, and quarantined the opium merchants. He also sealed off the Canton port to prevent any further opium trade.
The British government responded by attacking the blockade and over the next three years systematically wore down Chinese ports and evacuated the imprisoned refugees in Canton.
The British military strength wore down the Chinese forces until 1841, when the forts at the mouth of the Perl River were captured and a truce was offered by Chinese Admiral Kuan Ti. This truce handed Hong Kong over to British rule.
By August 1842, the Chinese sued for peace and signed the Treaty of Nanking, which not only included the accession of Hong Kong by England but also allowed The British EastIndiaa Company to carry on their trade operations wherever they pleased.
If You Can’t Beat ‘Em
Now that China and Britain had opened the lines of trade, a need for a local bank became apparent. In March 1865, Sir Thomas Sutherland founded the Hongkong and Shanghai Banking Company Limited in Hong Kong and in April 1865 he established the bank in Shanghai.
The bank grew to be the leading bank in Asia. It was one of the first to open a bank in Singapore in 1877. It also established a bank in Thailand in 1888, was the Hong Kong government bank through the 1880s, and handled the British Colonial Government accounts throughout China, Singapore, Japan, and Malaysia.
HSBC History and World War II
Between 1880 and 1935 the bank experienced a period of growth. It opened new branch offices in Bangkok, Manila, and Shanghai, and built a new head office in Hong Kong in 1935. This head office didn’t last long in anticipation of the Japanese invasion of Hong Kong.
In 1941 the office moved to London while both chief managers died during Japanese internment. In 1943 Sir Arthur Morse took over the head position and oversaw operations during and after World War II. The bank helped rebuild Hong Kong after the war and supported new manufacturers and businesses.
The Next Fifty Years
HSBC continued years of success and changing leadership. In 1962, the bank named its first ethnic Chinese Chief Manager. H.J. Shen was the former head of the Central Trust of China and managing director of Maysun Trading Company.
In 1965 the bank bought a controlling interest in Hang Seng Bank of Hong Kong. In 1977, HSBC promoted Michael Sandburg to the chairmanship, whose management propelled the institution’s rank to the 23rd largest bank in the world in 1983.
During Sandburg’s tenure, the bank acquired controlling shares of Marine Midland Bank in New York. It continued global expansion to include Canada and Australia. Wiliam Purves became the new chairman in 1987, and he oversaw the bank’s ownership of Marine Midland Bank increase to 100 percent.
In 1991, HSBC Holdings plc was established in London and the parent company for the whole group. The company’s shares were traded on five global stock exchanges.
A Few Fun Facts
Local Hong Kong residents called HSBC the “Lion Bank” because of two lions framing the door in its second headquarters. The lions are named Stephen and Stitt, after two of the banks’ managers, and depicted the personalities of the two men by roaring and sitting quietly.
Today, the lions are a tourist attraction in Shangai, and “petting the lion’s paw” is an act to bring good luck. They even have the lion on their credit cards! Speaking of which, there’s more info here if you want to see them.
The bank retains the original single-word name Hongkong despite the colony’s 1926 official name change.
English writer P.G. Wodehouse used the bank as inspirational material in some of his early works. He had an inside perspective because he had been a bank employee at the beginning of the century.
HSBC’s Singapore headquarters are at the same site as their original branch was built, on Collyer Quay.
In April 2019, HSBC announced that they won FinTech’s Consumer Banking Innovation Award. The award recognizes excellence and innovation in the Financial Technology market.
HSBC deployed a humanoid robot Pepper® at its New York office after a kickoff test in Beverly Hills and Seattle. Pepper’s presence has increased ATM transactions, credit card applications, and is responsible for a 60 percent increase in new business and products in the company’s New York branch.
This robot is designed to innovate the customer retail banking experience and was developed by SoftBank Robotics America.
From Opium Wars in Asia to robots in New York City, HSBC history is a fascinating journey from the old world to new innovations. If you enjoyed this article, check out some of my other posts. You might just get inspired to pet the lion’s paw!