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The Interview: S K Green, Group Chairman HSBC Holdings PLC Issue 33 - August 2007 Anyone who believes that real estate is not the concern of senior management is mistaken. At age 57, Stephen Green, Group Chairman, HSBC Holdings, the group that owns the Hongkong and Shanghai Banking Corporation and Hang Seng Bank, oversees a company with over 10,000 offices in 87 countries, not to mention thousands of retail points and branches all over the world. Real estate strategy for these offices and branches is one of the many things he has no choice but to concern himself with, as he explained a press conference in Hong Kong on 27 June 2007. As with many multinational companies, Green’s real estate strategy is aligned with the group’s business plans in each of the locations where it has a significant presence. HSBC has 2.6 mil commercial banking customers across the world and many millions of individual customers. He believes the third that have international transactions or operations in more than one country are looking for “connected up services”. This seamlessness and the ability to reach customers is behind HSBC’s choice of locations for both offices and retail branches. Green uses retail branches in China as an example. New branches in China continue to be launched as regulations free up retail banking for international companies. With a new branch just opened in Shenyang, Green says business in China is “going extremely well. We are focusing on commercial banking particularly with customers who have international connections and secondly on our premier customers. I called in on one of our sub-branches in Beijing yesterday. It has only been open for two or three months but already you can see how it is having a very great success and already it is attracting a new client base of premier customers. So I am very excited about the possibilities in China. And we continue to develop our network and it is going very well.” Green says it is hard work to get consistency but that is their goal. “Our HSBC premier proposition is now being rolled out across the world. It is identical everywhere. The branch that I went into yesterday in Beijing is delivered in exactly the same way as our premier branches in Britain or America or in South America.” That’s not to say that there aren’t limitations. Proximity to its customers is the banks primary motivator when deciding retail locations, so it needs to first identify the customer. Take the example of private banking and retail expansion, Green says, “in terms of broad-based retail banking, it is unrealistic to expect HSBC to have its own network and a significant presence in that market [China]. If I compare our 50 or 60 outlets with the 2400 that Bank of Communications has across the face of China, it is unrealistic to be a significant participant in that market. The premier market is very different, it tends to be concentrated in the larger cities, its accessible by a smaller number of outlets and it makes sense for us to concentrate on that rather than the broader retail market.” He acknowledges private banking as a “growing opportunity” and notes how this feeds other areas of the business. “China or anywhere else, one of the most important pieces of connectivity for us is the connection between private banking and commercial banking, because very often the people who own the businesses we lend to are the natural client base for private banking. And as we develop our commercial banking enterprise in China we will also seek to develop our private banking customers. At the moment we have a representative office in Shanghai for the private bank... It has to be one step at a time.”
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“We develop our physical footprint following where we think the concentrations of activity of the relevant customers are, this tends to mean that we develop our branches and sub branches in the major cities. China’s a big place of course and that gives us a lot of opportunity in a number of different cities and, frankly, I think it is some years before we are in a position to cover all of the cities that should be relevant to our activities”. Location, Green points out is not just about following current and customer base in isolation. “We are also very determined to make sure that we are on a position that fits in with the policy priorities of the authorities. It is a very important theme in China to make sure that banking services are being brought to a broader range of the participants in the economy including in particular small and medium sized enterprises and even the rural areas. We now have over 50 outlets in what is even now a huge market that is growing at at least ten percent a year. So the opportunities while not limitless are very large for as far ahead as we can foresee. We will make sure that we develop our network in a way that helps us to reach out to those customers.” Green describes Asia as “the heartland of HSBC’s business” and notes that HSBC’s investment has increased in each Asian country in the last year. This commitment to Asia can be seen in real estate strategy For example, the group recently sold and leased back its London office in Canary Wharf while concurrently investing big in Shanghai. He says the sale and lease back “gives us flexibility over the years ahead to be flexible about the way we use office space, recognizing that as work patterns change and technology changes we won’t necessarily want 8000 people concentrated in one head office building in London”. Green was involved in the financial side and controlling the effects of the London and Shanghai real estate deals on HSBC’s reputation. “One way of explaining it is that they are both extremely good deals. But another way is that we believe our space requirement in Shanghai is going to increase significantly but I don’t believe our space requirement in Canary Wharf is. You measure these things place by place, with reference to the specific market circumstances. We saw a very good deal in London and I think it helps us to be psychologically flexible about the way we use space in Canary Wharf. I think in Shanghai we wanted to make the statement that it was our base for mainland China and it is for reasons you will understand growing very rapidly for us.” Green’s commitment to Asia is not just seen through his company property. If the Chinese government allowed international companies to list on the Shanghai stock market, he says, “that is something we would plainly be interested in.” He sees opportunities and “tremendous potential” in India, Vietnam and Indonesia. And further Green wrote a book, which he describes as “out of date and, in English, out of print” but it has just been translated into Chinese and is now available in Hong Kong “fresh off the press”. executive bio Joined HSBC in 1982. Group Treasurer from 1992 to 1998. Executive Director since 1998. Executive Director of Corporate, Investment Banking and Markets from 1998 to 2003. Group Chief Executive from 2003 to 26 May 2006. Chairman of HSBC Bank plc, HSBC Bank USA, N.A., HSBC Private Banking Holdings (Suisse) SA, and HSBC USA Inc. A Director of HSBC France, The Hongkong and Shanghai Banking Corporation Limited, Grupo Financiero HSBC, S.A. de C.V., HSBC North America Holdings Inc. and HSBC Trinkaus & Burkhardt AG. RFP		Seamlessness and the ability to reach customers is behind HSBC's choice of locations for both offices and retail branches.

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