Financial Times

HSBC CEO's brush with death

By Feizal Samath in Hong Kong
Reminiscent of an action scene in a James Bond movie, Mike Smith, HSBC's new CEO for Asia once drove through an Argentine street shot in the leg while his attackers pursued him.

The attack in around 1999 came after Smith, the bank's CEO in Argentina, had fired a couple of officers in the organisation's marketing section involved in a scam. "I stayed on in Argentina for three more years. I was not letting those guys get the better of me," he recalled to a group of senior journalists from Sri Lanka and Bangladesh visiting the bank's Asian headquarters in Hong Kong last week.

Smith underwent a few operations after the shooting but now doesn't show any signs of the attack or any discomfort in his legs.

In a wide-ranging question-and-answer session with business editors from Sri Lanka and chief editors of national newspapers in Bangladesh, the HSBC CEO spoke on a range of issues covering China's role in the global economy, the need to invest in education, the growing demand for technology and the importance of corporate social responsibility.

He said while the next 20 years would see exponential growth in the world economy there is a need for radical changes in the education system to cater to market needs. In this sense, education will play an important role with increasing state investment in this sector.

Smith said it was difficult to understand why universities are reluctant to change their curriculum to be in line with modern needs. "They (academics) seem to be deep rooted in tradition and hate change," he said of the university curriculum system, which is a common problem in Sri Lanka and the rest of South Asia.

"Even though academics hate change, they need to change with the times. Education should keep pace with technological advances," he said at a conference room at the imposing HSBC headquarters overlooking the harbour.
Looking ahead, Smith believes the 21st century would be Asia's century. "This is where growth would take place with two enormous economies - that of China and India."

China, currently driving the Asian economy, is expected to show significant growth in coming years, Smith said adding that HSBC was truly a global bank with equal proportions (33 percent each) of its revenue coming from Asia, Europe and North America.

South Asia, he noted, had benefited from a regime of low interest rates. Visiting Sri Lanka in the first week of May, Smith was impressed by pragmatic policies adopted by the Central Bank on exchange and interest rates. "The Central Bank has done a good job. They have been careful and sensible on monetary policy."

HSBC's investment in China of US $1 billion was set to rise while bank investments were equally expected to pour into India.

On corporate social responsibility (CSR), Smith expects large multinationals to be heavily involved in CSR. "It is absolutely critical that multinationals be more responsible (to the community they serve)."

Printing your own notes

It may be rare occurrence in the world but in Hong Kong, three private banks issue their own currency notes while only coins and a 10 dollar note are issued by the Monetary Authority here.

The biggest note issuer is HSBC, formerly Hongkong Bank or the Hongkong and Shanghai Banking Corporation.

"The bank has been issuing its own notes one month after it was formed way back in 1866," noted Jennings Ku, Senior Design Services Manager in the bank's Group Public Affairs Department.

Jennings, whose team designed the latest series of notes part of which were issued last year, said designing a new note takes at least two years. "It takes two years from the design stage, approvals and final issue," he told The Sunday Times in an interview with a designer of currency notes.

The other two banks in Hong Kong that issue notes are Standard Chartered Bank and the Bank of China. When fresh notes are printed - and this happened almost every year -, the three banks have to purchase the amount printed depositing an equal value in US dollars with the Hong Kong Monetary Authority. The Authority is housed in the International Financial Centre building, a skyscraper and among the tallest buildings in the world alongside the harbour front.

Like the other two banks, HSBC issues fresh notes printed at a De La Rue facility in this territory every year mainly to replace notes that are torn or worn out due to regular use. New designs are rare and the last series was launched last year after a Monetary Authority decision in 2001 based on the need to standardise the colour and improve on its security features.

"We began designing new notes in the 20, 50, 100 and 1000 denominations soon after the Monetary Authority decision," Jennings said. HSBC issued new designed notes in the 100 and 500 denominations last year while the 20, 50 and 1000 series would be issued in the second half of this year. Jennings said his team prepared three note designs for senior management at the bank to consider and take a final decision.

They were the birds of Hong Kong, scenery and landmarks, and flowers. The management decided on the second set of designs - scenery and landmarks. Jennings' team also designs a ll the reports including the global report of the HSBC group headquartered in London, and other bank material.

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