It being Sunday, or Monday, or one of those kind of days, and this being a Journal of Record [*], I thought I’d put out the kind of quiz that only my readers could answer.
What do the following UK-headquartered banks:
* HSBC
* Lloyds Banking Group
* Standard Chartered
* RBS
…have in common with no other UK-headquartered retail banks?
[*] I’m almost embarrassed to say that this blog is being archived by the British Library. I actually have no idea what the hell 25th century historians of the 21st century will do – well, I recognise half of my readers believe they’ll occasionally venture out of their caves and wonder why the outside world still makes their skin blister or similar. But right now, every humanities undergrad thesis candidate is delighted to find a neglected text to use for their work – in 2500, this crap will be (and, in terms of proportion of utter shite to “survives”, actually will be) available for an undergrad thesis. In which case, hello 2500 person, I hope they’ve genetically engineered girls to look like Natalie Portman, gizza shout if you’ve got a time machine, OK?
Give us a clue?
There are no other independent UK-headquartered retail banks of any significance, except perhaps for C Hoare & Co. Which is significant only because it is so unusual.
Oh, except Barclays, so perhaps the answer is "they're not Barclays (or C Hoare)". The advantage of an account at C Hoare is so great that customers are by invitation only. The advantage being that you can say "my bankers are Hoares" with no risk of contradiction or libel suit.
Which is more likely to have been the reason for Byron to have banked there than for Jane Austen.
Plus Northern Rock and the Co-Op.
Clue #1: wind the date back to 2007, and the banks in question would have been HSBC, HBOS, Standard Chartered and RBS.
Clue #2: Within the group of banks that have this thing in common, there are two subgroups [HSBC and Standard Chartered] and [HBOS and RBS].
OK, so HSBC and Stanchart make most of their money in Asia, RBS is Scottish and HBOS is Yorkshire and Scottish. Barclays, the Co-op and C Hoare are English, in a way that your selection are not (arguably).
The Northern Rock is not independent – unlike RBS where the government owns 84% but lets them get on with it, NR is firmly in the public sector.
Along the right lines, but not solely "Englishness". Lloyds has inherited this quality from HBOS, despite being predominantly English still.
-Standard Chartered's original constiuents; 'Chartered Bank of India, Australia and China' and 'Standard Bank of British South Africa' were both founded by Scots.
-HSBC was founded by Thomas Sutherland, a Scot.
-RBS weas presumably founded by a Scot(s) and Lloyds through HBOS, through Bank of Scotland also has Scottish origins.
All Scottish?
You deserve a commendation for that one, but still not quite. Lloyds is still primarily (by deposits, market cap of constituents, and anything else one would care to mention) English. OK, the giveaway clue: lax financial regulation is often described as "a license to print money".
You've given enough clues so I don't feel to proud in answering this, but is it because they can all, um, print money? (Scottish bank notes, NI bank notes, etc.)
Correct. HSBC and SC print money in Hong Kong; HBOS prints money in Scotland; and RBS prints money in Scotland and Northern Ireland.
Clydesdale Bank plc is headquartered in Glasgow and Northern Bank plc are headquartered in Belfast; they're owned by NAB and Danske Bank respectively but you didn't say that. I think that First Trust and BOINI might also have separate plcs and headquarters in the UK too.
actually, checking on Google reveals that I was right about FT and wrong about BOI, meaning that HSBC, Standard Chartered and Bank of Ireland are unique in being banks with the authority to print banknotes in countries other than that of their headquarters.
And thinking about it, HSBC Holdings plc is headquartered in London but it isn't a bank, HSBC Bank plc is also headquarted in London but it doesn't print money and The HongKong and Shanghai Banking Corporation Limited prints money, but it isn't headquartered in the UK. Thinking about it this is also true of Standard Chartered plc with respect to Standard Chartered Bank (Hong Kong) Limited.
and thus, unless someone knows different, Bank of Ireland is the only institution anywhere in the world which is allowed to print banknotes in a country other than that of its incorporation (BoI does now run a UK subsidiary with a banking licence, but as far as I can tell it's not that one that prints the banknotes). This is, of course, a consequence of the fact that Bank of Ireland has been around longer than the country of Ireland.
I'm not sure my definition of "headquartered" is wrong here (clearly yours also isn't wrong, but I think they both apply). For 100%-owned and controlled companies in any business other than banking, the legal entity is irrelevant – the parent company controls everything that happens, reporting lines don't usually stick to corporate entity lines, and all published accounts are consolidated.
I guess for banks it's complicated by regulatory stuff, so the board in the controlled company have more power and independence and the parent company have less ability to Do Whatever The Hell They Like than for non-banks. The only MNCs I've worked in are non-banks, so the legal entities have been pretty much irrelevant.
Anyway. Interesting it was only in 1994 that AIB transferred the banknote printing business from the Irish entity to the UK (NI) entity. Also interesting, if BOI were to do the same (e.g. if it were planning to sell off the NI business), there would still be an anomaly of sorts, because BOI NI is run as part of BOI UK, which is an English company not an NI company.
Final pedantries: the BoE website lists Northern Bank and Ulster Bank as limited companies, not plcs. I thought that the banking rules (as above) meant that UK-incorporated banks had to be plcs even if 100%-owned by someone else?
Ooh, just thought of another final pedantry: it's a shame that Midland Bank sold Clydesdale to NAB in its last attempts to stave off going under. Otherwise, HSBC would have ended up gaining Clydesdale as part of the Midland takeover, and would most likely have gradually rebranded it to HSBC as with its other acquired businesses. Which would mean we had HSBC notes in both Scotland and Hong Kong…
Holding company vs banking company matters a surprising amount – HSBC Holdings plc debt was always rated a notch or two lower than the bank debt; specifically in the context of note issuance it matters because money isn't 100% fungible around the group – ie your First Trust bank notes are backed by sterling notes held in a separate UK entity to which the creditors of AIB would not have recourse.