My last job on the buy side was with HSBC. I was a part of the team that launched the company’s USbroker/dealer and one of their first US investment bankers. I had worked for British banks before so I knew something of the culture.
Now HSBC (we used to call them the “Hot Shit Boys from China” despite their all being Brits) has a very strong corporate culture. So strong that they are almost arrogant about it. “Founded on sound Scottish banking principals,” they liked to say. That means “cheap.”
But for a bank, cheap is good. You take money in at X, lend it out at Y and if you control costs you can make a lot of Z. HSBC is good at that.
But they are also good at buying distressed properties. (Part of the reason for this is that they have seen in their rear view mirror how that are not so great at buying robust properties, more on which some other time maybe.)
I remember watching the company purchase one of the largest banks in South America for a dollar (or a peso or a zloty or whatever). That dollar was supported by a commitment to pour in $1 billion more as needed but with the proviso that at the end of a year they could put back to the selling government any truly bad loans. Now that is some fancy negotiating. But HSBC knew exactly what they were willing to do and not do and where they were good and not good.
But the key to the bank’s deal success from my perspective was not their negotiating unbelievable terms but their process of making those deals work. They would drop an integration SWAT team into the acquired company – painted up as knights rescuing damsels – and immediately embark on jamming the HSBC Way into the old bank. And it worked. The acquired employees could see that HSBC knew what they were doing, that the prospects for the bank’s future success (and their own future careers) had just gone through the roof and that finally someone was making sense out of what had previously been an unmitigated mess.
Formula: large control-freak organization finds attractive candidate teetering on the financial brink, rides in, imposes immediate order (their definition), makes streets safe again for women and children, holsters guns. My hero.
Comment: Do not try this at home (or in any industry with strong, change-resistant labor unions).