Europe\'s Largest Bank by Market

¶ … Europe's largest bank by market value, HSBC has significant competition on the global stage. It is currently the second largest bank in the world behind Citigroup. Although it has its strongest holding within Europe, it is behind its competitors within the United States and Asian sectors, where other competitors have gained an advantage.

From an overview perspective, there are two specific competitors on a global level that challenges HSBC, Barclays and Citigroup. Barclays has a market capitalization of 95.72 billion dollars, while Citigroup's total market capitalization is 267.85 billion. Citigroup continues to challenge HSBC for its core user base within Europe while expanding into the Asian sector. It stronghold is within the United States, where it has a dominant market position as the number one bank by far exceeding the market capitalization of its two closest competitors. Barclays, based in Europe, is a direct competitor to HSBC, however it has a much lower market capitalization and it has lagged behind in several competitive areas.

Barclays primarily competes with HSBC within its European division where it has the majority of its offices. Barclays currently has 122,600 employees worldwide, with almost 70% of them stationed in Western Europe, although it has expanded its offices within the United States and specifically China. Its projected quarterly growth is 14.7%, largely spurred by its increases in corporate lending and investment banking. As a direct competitor to HSBC, Barclays has been a formidable challenge in some aspects. However, since HSBC's current market capitalization is around 214 billion dollars, Barclays is still undersized to be a formidable challenge. HSBC has out competed Barclays in several crucial areas over the past year to allow it to maintain its current market share. First, its investment banking division rose by 37%, which outperforms Barclays by a significant amount. Secondly, its commercial banking unit has also gained significantly increasing their revenue to 2.9 billion. Both of these results are much better than expected. The primary competition with HSBC occurs within the European demographic, where HSBC has its base holdings. However, these two companies have been able to split their territory remarkably well and have not considered a buy-out or hostile take over strategy.

Citigroup is the largest bank in the world and thus HSBC's greatest threat on many levels. Not only does it have more offices as well as market capitalization, many of its divisions compete directly with HSBC for market share. A comparison of their revenues shows that Citigroup outpaces HSBC with a revenue of 84.84 billion dollars. However, this does not mean that Citigroup is significantly better than HSBC, because they have different market shares. Citigroup competes with HSBC on the global market; they are especially strong competitors in investment banking, commercial banking and securities. One of the growing areas of competition is within their personal financial services division and their wealth management division. HSBC has seen this sector grow by 13% in the last year, due to the infusion of resources they have invested into this division; however Citigroup is still comfortably atop this category with 9.2 billion dollars in total revenue from financial services, compared to HSBC's 5.9 billion.

Other than these two primary competitors, HSBC faces a slew of emerging banks. Bank of America, also one of the world's largest banks is in the fray for many competitive segments of HSBC. In addition, emerging sector leaders such as Morgan Stanley, JP Morgan, etc. are challenging the traditional stakeholders. The largest competitive demographic right now is the Asian sector which is just on the cusp of deregulating many of its banking practices and allowing foreign banks to directly enter their territory. As a result HSBC is one among many banks that hopes to captures this large demographic. However, unlike Citigroup and other investment banks, HSBC does not have a large holding in Hong Kong, one of the reasons that it is not nearly as successful as others within the demographic. Within this demographic, HSBC must also compete with local banks, specifically the Bank of China, the Chinese Agricultural Bank, etc. These banks have large market capitalizations because of their public relationship with the government and therefore will be key stakeholders in the future competitive landscape of Asia.