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HSBC in North Africa: Going Where the Money Is

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In summer 2008, London-based HSBC, one of the world’s largest banking and financial services institutions decided to add Algeria to its list of emerging markets operations. Libya is likely next in line. The decision meant that as of August 2008, the giant bank entered the Algerian market where it launched what it called “a full-service bank.” But is it really a full-service bank with the goal of contributing to economic growth and development or is HSBC focused on international trade operations to enable the flow of money in and out of the country?

With 70 employees, HSBC Algeria apparently began offering a suite of commercial and corporate banking services and limited products for individuals, essentially under the banner of wealth management. The bank, however, is seen as following the footsteps of Chinese and other Asian businesses that are operating in North Africa and indeed elsewhere in the entire continent.

By doing so, HSBC seems to focus on what emerging regions such as North Africa are beginning to dislike, and that is servicing the less risky export-import and trading operations, and avoiding direct investments in form of funding national economies by providing financing to enterprises and industries. Instead, as the bank’s general policies on emerging markets hint, what matters is contributing to trade and commerce, where there is obviously less value creation than in other sectors of the economy. In assessing the bank’s performance in the region, The North Africa Journal made efforts to reach out to company, but never received any follow up for such requests.

While the bank is keen on having a presence in so-called “emerging markets,” it is ironic that it has limited to no-presence in the more integrated economies of Morocco and Tunisia, for example. May be the lack of energy resources and oil and gas commodities make these countries less “emerging”?  [Subscribers continue here | Otherwise click here to subscribe]

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