The Ethical Issues Relating To Hsbc Finance Essay
Overview of HSBC Holding Plc
HSBC (Hong Kong and Shanghai Banking Corporation) Holding Plc is the worlds’ largest banking group and sixth world largest company according to Forbes Magazine in 2009. Now it spread its banking business all over the world. HSBC bank was funded in 1865. Now the bank has network of some 10,000 properties in 86 countries around the world. The bank employed 325,000 full time and part time employees all over the world. The bank provides comprehensive range of financial services-personal, commercial, corporate, institutional, investment and private banking clients all over the world. The bank provides financial service to 100 million customers in different regions all over the world. HSBC are held over by 210,000 shareholders in 120 countries. These shares are traded in New York Stock Exchange in the form of American Depository shares. It is listed in London, Hong Kong, New York, Paris and Bermuda stock exchanges. In 2008 the bank made revenue of $137,309,000,000 and its net profit was $6,498,000,000. In 2009 when some of the major banks in the world are in trouble HSBC remain in top form because of its strong foundation.
Ethical Issues Relating to HSBC
Rights, Conflicts and Responsibilities
Rights: HSBC is an employee friendly company. The bank is always notice to the benefit of the employees. Maintaining work, life, balance polices is the main motto of the bank. The employees are openly giving their opinion to their line manager. They can easily take part in the strategy develop meetings. The bank provides world class remuneration and training facilities to their employees. The bank is also providing share options to their employees. The employees participate in various variable play agreements. As a part of the corporate social responsibility the bank employed differently able people. These are the brief description of the rights of the HSBCs’ employees.
Conflicts: It is the right of the employee to give his or her openly to the meeting and in the time of making strategic plan. So there may be some conflicts between the employees in the bank. The bank employed 325,000 employees all over the world. so there may be interbank conflicts. HSBC has more than 210,000 shareholders all over the world. They expect more profit from the bank. So there may be some sort of conflicts between the shareholders and the bank. HSBC is one of the world leading banking corporations of the world. So there may be some conflicts with other banks in terms of banking service, in terms of making profits, in terms of providing profit to their shareholders and in terms of hiring best employees from the market.
Responsibilities: The main responsibility of a bank is to keep the customers money save and secure. Invest the money in those sectors which will give the bank highest return. Another main responsibility of eh bank is to provide the highest return to their share holders. HSBC perform all these responsibility very well. They get best award as a best cash management bank in ASIA in 2009. There are no objections about the HSBCs’ responsibility in the banking industry.
HSBC marketing strategy is very strong they use handsome amount of money for advertising. They know it very well that what should be the marketing strategy in the serving area. They take different types of marketing plans of different area. HSBC banks have 10,000 affiliates all over the worlds in 120 countries. The target customers of the different country are different. They set their marketing plan and strategy according to their target customers. The bank also sponsors of different social developments programs.
There is no doubt about the professionalism of HSBC bank. In below I give a graph of last three years net income of the bank.
Figure : Net Income of HSBC (2006-2008)
In 2006 and 2007 the revenue of the bank is in increasing trend but in 2008 due to global recession net income of the bank is going down. But compare to other world class the bank condition and income is very good. According to the Forbes Magazine it is world leading bank of the world. So the bank is the most reliable bank of the world. the bank employed most professional people and who provide the best service to the customers.
Communication means connected with internal employees and external customers and shareholders. Employees of the bank are to share information with their colleagues. They are also free to make contract personally and officially to their colleagues. HSBC arrange different types of cultural programs for their prime customers and colleagues and their family members. In this way HSBC maintain their communication. The bank also sends souvenirs to their customers at different religious and cultural occasions.
Freedom of Action
Freedom of action means the employees freedom to take any actions. It is the right of the employees to participate in the strategy development meeting and they are free to give their opinion in the meeting. As well as the employee of the bank are free to discuss any topic to their line manager. They are free to provide solution to their customer, which is also a good sign of independency of their customers.
Censorship on the Internet
Computers and Work
All kind of banking transaction of the bank is performing through internet. The bank is maintaining all databases in computer and the employees of the bank perform their task in computer. The bank has a strong computer network all over the world. So they can easily share the information from one country to another in every minute. All kind of financial analysis of the customers is done through computers. The financial experts are done the task.
Security of money is a prime conscious of the customers. If the customers do not fill comfortable they will not deposit their money in the bank. HSBC has 100 million customers all over the world. So HSBC gain the trust of the customers. The customers of the HSBC believe that, their money will remain secure in the bank. The bank experts decide in which sectors they will invest the depositors’ money that will give the highest return to them. So the shareholders of the bank are secure for their share value.
These are all about the ethical practices of the HSBC Bank. So, at the end it can be said that they maintain their ethical issue very strongly. It is another reason of their success in the banking industry.
Legal system of Spain
Brief Description of Spain
Kingdom of Spain is the official name of Spain. It is located in the southern Europe on the Iberian Peninsula. It is one of the members European Union (EU). Madrid is the capital city of Spain. Official language is Spanish. Parliamentary democracy and Constitutional monarchy is the ruling system of Spain. 504,030 square kilometer is the total area of Spain. Euro is the currency name of Spain. In 2008, 46 million people are living in Spain. According to World Bank it is the ninth largest economy in the world, fifth in the Europe. It is also the third largest world investors. It is business friendly country. The legal system and other legal issue are discussed elaborately in below-
The Legal System
Constitutional Status: The Spanish Constitution of 1978 is the foundation of the Spanish transition to democracy. It is a constitutional monarchy. Cortes Generales is the name of its bicameral parliament. Monarch appoints and nominate the executive branch (consists of a Council of Ministers) presided over by the President of Government, it is confirmed by the Congress of Deputies following legislative elections. King Juan Carlos has established political custom since the ratification of the 1978 Constitution; the most popular parties of the who nominated by the king seats in the congress.
Origin of Law: The nominated members of the government make the rules and regulation of Spain. According to the 1978 Spain Constitution Spanish Court System is governed by the judicial council. It is free from the domination of the legislative and executive branches of Government.
Source of Law
Spanish Constitution should be the source of law. But the historical reasons civil code regulates the law of the country. There are three types of law. That’s: law, custom and general principal of law. Spanish legal system is hierarchical. In below the types of law are given. The rank is higher to lower:
European Community legislation
Spanish court structure is hierarchical. Structure of the Spanish court is given in the next page.
Chart 1: Court Structure of Spain I. Supreme Court: The Supreme Court is the highest level of justice in the Spanish system. Though it is based in Madrid but its jurisdiction extends throughout the Spanish territory and over all judicial matters. Supreme Court is divided into five Chambers-
- Militar and
ii. National Court: National Court has its jurisdiction all over the Spain. It is located in Madrid. It has three chambers. That’s:
- The Criminal Chamber: the cases involves with royal family, high official, major drug trafficking are deals in the criminal chamber.
- The Administrative Chamber: in this chamber hires and apples against ministers and secretaries decision.
- The Social Chamber: it is bigger than the autonomous committee. It tries the special process for contesting collective bargaining agreements applicable to a territory.
iii. Regional High Court: This is the highest level of justice within each autonomous committee. It is divided in to four chambers:
iv. Provincial Court: the provincial court deals with civil and criminal cases. It is located in the capital of province. Its jurisdiction extends throughout the province. It has two portions:
- Civil Section
- Criminal Section
v. Tribunals: Tribunal court is divided into three parts:
- Central Criminal Court
d. Different Forms of Business Allowed to Operate and the Laws Governing Them
Spain is a business friendly country. According to World Bank it is the ninth largest economy in the world, fifth in the Europe. It is also the third largest world investors. There are mainly four forms of business organization can be formed in Spain: that’s
Partnership business is two kinds-
Company can be formed in
European Public Limited liability company
Limited liability company
New limited liability company
Spain welcomes all foreign investor to invest in the country. The investor need to meet with some legal requirements to invest in Spain. The legal requirements are - minimum capital, minimum share holder, and to maintain some legal corporate obligation.
Dispute Resolution Procedure
Arbitration is the only procedure which is follow to solve dispute outside of the court. The procedure is set by the parties in the absence of agreements. The procedure is set by the arbitrators. The exits cases are not the subject of arbitration.
Laws relating to
Spanish copyrights law is set by the Spanish govern. According to the copyright law the author of literacy, the scientific research documents are protected in the law. The law is first installed in January 1879. In the time of origination it was influenced by the French Copyright Law. In 2006 the law was modified and it approved by the Royal Legislative. The law covers the area of all original works of literature, science, art, music, and movie.
It is not mandatory that the creator must registered the work but if he registered the work than that person will get some advantages. It is providing prima facie to the creator.
New trademarks law enforced in 31 July 2002. According to the law if the applicant has no third parties then he will take the rights of the trademarks. If there is any third party also applicant for the same trademarks then none of the parties will get the rights of the trademarks. On the other hand if one party apple for the trademarks earlier than another party then the prior party will get the registration.
Patents right is preserved in Spain by the Patents Act 2002. There is also the Patents Regulations 1953. Royal Legislative is the major persons of patents related issues. Following purposes are served by this act:
Maintaining the patents register.
Providing the patents forms and other applications and documents forms.
Determining the patterns fees.
Receiving the pattern fees.
Publish the pattern in the official journal.
Registering patent attorneys.
Any Spanish person or any foreign neutral person gets the opportunity to patents his works. Royal Legislative becomes involved in proceedings when an opposition to the grant of an IP right is filed, when a revocation application is made, or when a hearing is requested. A panel of Assistant Commissioners (Hearings Officers) gives decisions on matters referred to the Commissioner for hearing.
The Designs Act 2002 is the main law relating to designs in Spain. It is supported by the Designs Regulations 1954.
Following purposes are served by the Design Act 2002:
Design registers should be maintained.
Power and the function of the design should be defined.
Design and document should be provided.
Determining design fees.
Collecting design fees.
Commissioner deal with designs issues in the hearing office and this office is the primary place for judicial cases of deign. Royal Legislative becomes involved in proceedings when a revocation application is made, or when a hearing is requested. A panel of Assistant Commissioners (Hearings Officers) gives decisions on matters referred to the Commissioner for hearing.
Royal Legislative publishes a number of practice guidelines that are used as a reference tool for examiners of designs. They set out procedural and legal matters relevant to the examination of applications of Designs under the Act.
These are the brief description of the legal system of Spain. It is said that Spain is a business friendly country. Its law and legal process prove the statements.
Changes of HSBC due to effects of-
Globalization: Globalization helps the multinational financial institution to expand there business all over the world. Early part of 21st century more than $1.5 trillion are traded daily for the expansion of the business. The effects of the globalization to the business organization are:
Tax free rate in different countries
Whole world is a single market
Increasing opportunity to use different mass media for promoting the products.
Increases the opportunity to diversify the work force.
Facing global competition
Threats of new entrance
HSBC is one of them who have expanding its business all over the world. For example: in 1990 the bank took over Midland Bank in UK. In South America the bank purchased Banco Bamerindus of Brazil for $1bn in March 1997. In 1999 it was an important year for HSBC bank. In the year the bank purchased Republic National Bank of New York for $10.3 billion. In the very next year the bank controlled over one of the largest bank in French named Crédit Commercial de France for £6.6 billion. In May 2008 the bank acquired IL&FS Investment in India. Now the head office of the bank is in London. In 2010 the bank will shift its head office permanently in Hong Kong. Share of the HSBC bank traded in different stock exchange all over the world. HSBC has presence in all over the main global market. The bank use global media to promote the products. All over the work the bank faces global competition with City Bank N.A, Standard Chartered Bank. The bank also faces competition with its other local banks. Without any question HSBC has the most international attendance among the world's multinational banking giants. The revenue and the trust of the people all over the world are increasing daily.
Development in Information, Communication and Technology:
HSBC has a very strong IT structure. The bank provides online banking services to its customers. The bank has a global virtual network. All kind of customers’ information is maintained in the computer. Development of communication is a major component of the banks. Without time to time development of the communication technology HSBC will not come in this stage. The bank has developed its information, communication technology time to time. Now bank delivers four basic products in its all branches. Internet banking is one of them. HSBC is one of the pioneers in internet banking. Upgradation of communication technology is a regular work of HSBC.
According to John D. Daniels, Lee H. Radebaugh and Daniel P. Sullivan states that Culture refers to the learned norms based on attitudes, values, and beliefs of a group of people. In the age of globalization culture play an important role for the multinational organization like HSBC. 325,000 employees in 85 countries work in HSBC. These people have different culture. HSBC shows respect to their culture. They design the organization culture in this way that they can follow the rules and regulation to their own country. These are all about the external environment of the HSBC. Internal environment of HSBC is also very flexible. The employees in the organization are free to make contact with its other colleagues in other country. They can easily share their ideas and point of views with their foreign colleagues and their line managers. HSBC is one of the banks who maintain their work life balance policy very strongly. Flexibility, good training and development program, attractive salary and strong corporate culture are the reasons of HSBC success.
According to Bloomberg, "HSBC is one of world’s strongest banks by some measures.” It is one of the most powerful financial institutions of the world. HSBC is the parent company of Hong Kong. It plays very important role in Hong Kong economy. So it can be said that it influenced the economic policy in Hong Kong. In US and in UK HSBC is one of the leading banks. It helps the government to make policy that is related to business for foreign country.
In South Asia the bank works as foreign multinational bank. They influence the government to making foreign banking policy. In some countries HSBC provide fund to the government or lend money to the government such as- Bangladesh. In these countries bank can easily influence the government to making policy that will help the bank.
Political stability is very important for the development of a business organization. It is very good advantage for the HSBC that, the main two countries in US and UK from where they mainly operated its worldwide banking business, have very strong democratic system. The bank operated in 86 countries. All of these countries political system are not same. In some countries political system is very unstable, such as –Pakistan. In some countries political power of those countries are not favorable for HSBC. Global political and economic crisis like- World war and world rescission also play very important role in case of multinational company like –HSBC. HSBC provides banking services all over the world. Now it is age of communication and technology. So any political crisis of a particular country is not play very important role in the total business of a multinational company. On the other hand it is very good for the HSBC that they did not have to face any major political crisis in the recent decades.
As a global company it also follows the laws of all countries where it operates. Its local operations are totally controlled according to local banking rules and regulations. HSBC is always respectful to laws because without showing respect on laws it is impossible to be a socially responsible banking institution. In every country where the banks operated its banking services follow the rules set by its central bank. The bank also follows separate law and terms condition for its website and internet banking. HSBC maintain strong privacy rules for their customers. They do not publish any information to other company without permission of the customers. In case of internet banking the bank provide selected information to the customers. It is the motto of the HSBC that they follow the rules and regulation and the being the social responsible company of the country.
People come to the bank mainly for two purposed; one is to deposit their money and other is borrowing fund from the bank. So the banks arrange their products and services according to the customers’ choice. HSBC provides banking services to 100 million people all over the world. They arrange the products according to the choice if the customers. HSBC respects the customers’ choice. So, bank diversified the products according to the customers need.
The main four products of the HSBC are-
Personal Financial Service (including commercial finance)
Global Banking and Markets and
There are also some sub products for the HSBC. So, when customers come to the bank he or she gets services according to his needs.
These are the factors HSBC manages successfully in its global operation all over the world. it is the reasons of his success in the global market.
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