The Wild Origins of The Hongkong and Shanghai Banking Corporation
Hong Kong smelled of sea salt and ambition when a young Scotsman named Thomas Sutherland stepped off a ship in the 1860s. Traders crowded the waterfront with crates of silk, tea and opium. Clerks ran around in sun-faded suits. Every second Briton in town talked about fortunes waiting to be made. Sutherland stared at this chaos and wondered why no one had created a bank capable of handling the mess. He saw merchants balancing giant trade deals on scraps of paper, sailors waiting for payment after months at sea, and government officials complaining that nothing happened on time. It all felt a little too improvised for the busiest trading post in the East.
Sutherland worked for a large shipping company, so he knew the rhythms of maritime trade. He sensed the colony needed a proper bank that could move money quickly and reliably between Hong Kong, Shanghai, India and London. The British Empire sprawled across continents. Silver and cotton travelled thousands of miles. Yet traders had to rely on distant banks that didn’t fully understand local realities. Sutherland gathered a group of fellow merchants and told them that Hong Kong needed its own financial powerhouse. They didn’t argue.
The result appeared on 3 March 1865, when The Hongkong and Shanghai Banking Corporation opened its doors. The name tried to impress everyone by announcing its presence in two of the most important ports in Asia. The first branch in Hong Kong worked out of a rented building where clerks inked ledgers by hand. A month later the Shanghai branch followed, right on the Bund, where ships unloaded mountains of goods and carried rumours from around the world.
The bank grew faster than its founders expected. The colony needed credit lines to finance shipments, letters of exchange for merchants who didn’t trust each other, and currency services for traders who juggled Mexican dollars, British pounds, Indian rupees and Spanish coins. The bank didn’t promise stability at first. It promised speed and local knowledge, which in the nineteenth century mattered even more. But speed didn’t protect it from drama. In 1867 Dent & Co., one of Hong Kong’s biggest trading houses, collapsed. Unfortunately, it had been one of the bank’s earliest backers. The shock hit HSBC’s capital reserves hard, leaving Sutherland and his team with long nights and tight budgets.
They survived. Resilience became part of the bank’s DNA. When the corporation was formally incorporated in 1866, the founders emphasised Scottish banking discipline. They talked about prudence, thrift and boring common sense. But the reality on the ground looked much more exciting. HSBC financed railways, mining operations, shipping routes and government loans across Asia. It issued banknotes in Hong Kong, a tradition that continues today. Every banknote carried a message: this is the institution you can trust when the world around you changes too quickly.
Changes came thick and fast. By the late nineteenth century the bank had spread to Japan, Siam, India and Southeast Asia. Shanghai alone kept the staff busy with factories, tea exports and mainland connections. HSBC became the unofficial banker of the British Empire in the East. There were days when half of Asia’s trade seemed to pass through its books. Hong Kong and Shanghai might have looked like colonial outposts, but within the bank’s walls, every desk hummed with global transactions.
The twentieth century didn’t treat anyone gently. The Japanese occupation of Hong Kong during the Second World War shut down operations and brought fear to the city. Senior staff were interned. Most branches froze their activities. Someone had wisely moved the bank’s reserves to London before the occupation, a decision that saved the group from collapse. When the war ended, the bank returned to a battered Hong Kong and resumed work with a determination that bordered on stubbornness.
Another upheaval came from the north. The Communist victory in China in 1949 forced many foreign institutions to leave the mainland. HSBC had to accept that its Shanghai origins belonged to another era. It focused on Hong Kong, which was about to experience a dizzying economic rise. Factories sprang up across Kowloon. Immigrants poured in from mainland China, bringing skills and entrepreneurial drive. The city reinvented itself as a manufacturing hub. HSBC served as the financial backbone of this transformation, lending to businesses, supporting infrastructure and providing the stability Hong Kong desperately needed.
Banking halls filled with people clutching passbooks. Small business owners queued for loans to buy sewing machines, lorries and warehouse space. The bank’s lions — the bronze statues at its entrance — became Hong Kong landmarks. People rubbed their paws for good luck, a tradition that still survives.
By the 197s the city emerged as one of Asia’s leading financial centres. The bank didn’t simply follow that rise; it helped create it. It secured its status as a note-issuing bank and built a modern headquarters at 1 Queen’s Road Central, with an ambitious design that made the building look like a giant Meccano set. The headquarters symbolised confidence. Hong Kong might have been small, but it played far above its weight.
Then came a subtle shift. HSBC had dominated Asia for more than a century, but the world was moving towards globalised finance. The bank needed to expand into new markets. It started in North America by acquiring Marine Midland Bank. It moved into Canada and Australia. Every acquisition brought new challenges, new regulators and new cultures to navigate. But the bank seemed comfortable with complexity. It always had been.
The political changes in Hong Kong stirred the next transformation. The 1997 handover to China raised unavoidable questions: would a major global bank keep its legal headquarters in a city undergoing such a dramatic shift? After long internal debates, the group created HSBC Holdings plc in London in 1991. The holding company became the official parent of the entire global group. The Hongkong and Shanghai Banking Corporation continued as the Asian operating arm. This structure reassured international markets and kept Hong Kong deeply embedded in the group’s identity.
The 1992 acquisition of Midland Bank in the UK turned HSBC into one of Britain’s largest financial institutions. London became the home of the group, while Hong Kong remained the beating heart of its Asian businesses. It looked like a migration, but in reality the group chose to straddle continents, combining British regulation with Asian growth.
The balance hasn’t always been easy. The Asian business still generates a huge share of profits. Hong Kong remains strategically essential. The bank still issues Hong Kong dollars and remains a central player in the region’s finance. Meanwhile London provides global visibility, regulatory stability and access to European and American markets.
Today the Hongkong and Shanghai Banking Corporation runs retail banking, commercial banking, wealth management and global markets across the Asia-Pacific region. Hong Kong continues to treat it as a quasi-institution of state. When policymakers discuss financial stability, the bank sits at the table. When global investors talk about Asia, they look at HSBC’s results for clues.
The corporation’s history reflects the forces that shaped modern Asia: colonial trade, shifting empires, war, migration, industrial booms and the rise of global capital. Every shift required reinvention. Every crisis forced adaptation. The bank prospered because it understood something simple: Asia rewards those who move quickly and stay flexible.
The story also shows how institutions can carry multiple identities. The bank started as a Hong Kong creation, served British interests, expanded across continents, moved its parent to London, and still calls itself the Hongkong and Shanghai Banking Corporation in its home region. Few banks manage to be local and global with equal confidence.
A curious detail is how people in Hong Kong speak about the bank. Many simply call it “the Lion Bank” because of the statues outside. The lions even have names: Stephen and Stitt. During the war, the Japanese melted one for metal, but the other survived. Local residents feel emotional about those lions. They stand guard over memories, prosperity and continuity.
As for the bank’s founders, they probably wouldn’t recognise today’s skyscrapers, trading algorithms or AI-driven risk systems. But they would recognise the energy. That same restless drive pushed them to create a bank capable of bridging continents. They lived in an age of sails and silver bars. Today the world runs on data and digital payments, yet the principle remains the same. Trade needs trust. Trust needs institutions. Institutions need to evolve or fade into history.
HSBC chose evolution. And in doing so, it wrote itself into the story of Hong Kong, Shanghai, London and the global economy.
photo: Daderot, CC0, via Wikimedia Commons