HSBC's Restructuring in India

Abstract

The case discusses the operations of HSBC Group in India and the measures taken by HSBC India in recent times to achieve a faster growth. It discusses in detail the reorganization program launched by Booker, the CEO of HSBC India to transform the conservative institution into an aggressive, performance-oriented one. The case discusses in detail various internal reorganization measures including the introduction of new work principles, downsizing, organizational reshuffling and greater focus on potential growth areas.

"We had to deal with structural issues and we were already behind the competition….. We want to change the structure of the organization so that there are more people operating on the selling and marketing side. As such, we are restructuring the skill set to drive sales and at the same time, restructuring the basic terms and conditions (of employment) to lower cost structure."

- Niall S K Booker, CEO, HSBC India.

The Hong Kong and Shanghai Banking Corporation Limited (HSBC) entered India as early as 1959. Despite being one of the oldest and well-established foreign banks, HSBC had been lagging behind local private sector banks and other foreign banks in India in terms of business network and growth.HSBC's competitors and industry experts regarded it as a conservative bank that lacked competitive spirit.

On November 2002, Niall S K Booker (Booker) was appointed Group Manager and Chief Executive Officer (CEO) of the HSBC Group in India. Booker soon realized that HSBC India followed a conventional approach to doing business and retained its old bureaucratic structure and culture.

He believed that the much criticized laidback work culture was the reason for the lacklustre financial performance of the bank. Booker decided to transform the bank's work culture so that HSBC could shed its bureaucratic and conservative image and gear up to face new challenges. He wanted HSBC India to be proactive and aggressive like its competitors. To achieve this, Booker concentrated on giving the bank a new direction by launching a major restructuring program.

HSBC is a leading global player in the banking and financial services industry. It is the third largest bank in the world in terms of market capitalization (Refer Exhibit I for top 10 banks in the world). It provided a comprehensive range of financial services, namely, personal financial services, commercial banking, corporate investment banking, private banking and other related businesses.

HSBC was established in 1865 to finance the growing trade between Europe, India and China. Scotland-born Thomas Sutherland (Sutherland), who worked for the Peninsular and Oriental Steam Navigation Company, established the bank. He found that there was considerable demand for local banking facilities in Hong Kong and on the Chinese coast. Sutherland established a bank in Hong Kong in March 1865, and another in Shanghai after a month. The banks' headquarters were at Hong Kong......

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

Issues

The case is so structured to enable the students to understand and appreciate:

The need for old and well-established organizations to change their outlook and the way they operate along with the changing times so as to compete with smaller, nimble-footed competitors successfully.

Examine the restructuring program implemented by HSBC India to revive its financial performance.

Critically analyze the strategies adopted by Niall SK Booker to make HSBC India an aggressive, performance-oriented organization.

Chart a growth strategy for HSBC India in the near future.

Case, HSBC India, HR Restructuring, Work Culture, Downsizing, Voluntary Retirement Scheme, Growth Strategy, Restructuring Program, Indian Banking Industry and Performance Orientation.