HSBC's Restructuring in India

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Case Details:

Case Code : BSTR148
Case Length : 12 Pages
Period : 1999-2004
Organization : HSBC India
Pub Date : 2005
Teaching Note :Not Available
Countries : India
Industry : Banking

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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HSBC in India

HSBC's origins in India could be traced back to October 1853, when the Mercantile Bank of India, London and China was established in Mumbai.

Starting with an authorized capital of Rs 5 mn, the Mercantile Bank soon opened offices in London, Chennai (India), Colombo, Kandy, Kolkata (India), Singapore, Hong Kong, Canton and Shanghai.

In the next 10 decades, the Mercantile Bank steadily expanded its geographical network and service offerings, keeping pace with the evolving banking and financial needs of customers. The Mercantile Bank was acquired by the HSBC Group in 1959. The head office of Mercantile Bank at the Flora Fountain building in Mumbai continued to be the head office of the HSBC Group in India.

In the 1970s, HSBC decided to expand by acquisition and formation of its own subsidiaries. HSBC introduced India's first automated teller machine (ATM) in 1987. In 2001, HSBC opened the first bank branch in Pune (Western India) that remained open all 365 days a year...

The Restructuring

On his appointment, Booker's approach was to focus on fine-tuning and executing existing strategies, rather than experimenting with new plans. He intended to take it slow and steady without radical changes.

He said that "the people issue" was very important to him. Therefore, the key components of the restructuring programme included introducing new work principles, downsizing, organizational reshuffling and focus on new growth areas.

New Work Principles

HSBC's work culture was considered most bureaucratic among all foreign banks in India. Reportedly, the top management had a laid-back attitude towards work. An insider said, “There is a bunch of people at the top who aren't very competent and who all play golf together. It is basically an old boys'club...”

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