Financial institutions are crucial in all economies due to the services that they provide to their customers. In the UAE, various financial institutions seek to satisfy the needs of their customers. Some of the services, which they offer to their clients, include corporate banking and retail banking. In corporate banking, these services include the provision of funding for the projects, undertaken by clients’ institutions. On the other hand, retail banking deals directly with retail customers by providing services such as cash deposits, savings, and individual loans among others. One of the financial institutions, operating in the UAE, is HSBC. Among its several corporate clients is Diamond Properties, a private limited company dealing in real estate. To understand the activities of HSBS, one should define its history, the structure of its corporate sector, the products, and services that the bank offers to its customers as well as give an outline of Diamond Properties as one of its corporate clients of this bank.
Background and History
HSBC Bank UAE is a subsidiary of HSBC Holdings plc. The latter is the parent company, located in London, and it manages all its subsidiaries in the world. The parent bank’s history began in 1865 with its founder Sir Thomas Sutherland who had also created the Hongkong and Shanghai Bank in Hong Kong, a British colony back then. The institution has continued its expansion worldwide by launching various subsidiary banks all over the world. In 1992, HSBC Holdings plc was created to serve as the primary company, managing its other subsidiary banks (HSBC, n.d.). Furthermore, HSBC UAE is a part of HSBC Middle East Limited and it has its headquarters located in Dubai. The institution was established in 1946 as a subsidiary of HSBC and it has been committed to providing conventional and Islamic banking services to its customers (HSBC, n.d.). Some of the services include loans, credit cards, asset management, deposits, and corporate banking such as financing, advisory, acquisitions and mergers, underwritings as well as IPOs for the different clients that they serve. This bank prides itself on being among the largest financial institutions in the world and having the ability to provide its clients with various services and financial opportunities. HSBC Bank Middle East also enables businesses to thrive, thus contributing to the prosperity of various economies. This is done by adhering to the values strictly and faithfully. The first of these values is the ability to be reliable for its customers. HSBC Bank Middle East follows the principles that they believe in to achieve its goals through resilience and trustworthiness. The institution is also open to different cultures and ideas. Lastly, HSBC Bank Middle East is focused on connecting its customers to the communities where they work. The current CEO is Abdulfattah Sharaf. The institution has a Board of Directors that is made up of 10 board members, including the CEOs of the UAE and Qatar (HSBC, n.d.). The CEO is tasked with overseeing the day-to-day operations of the bank, while the Board of Directors is meant to serve as an oversight for the way that the institution is managed from outside.
The Corporate Banking Department Organizational Structure
An organizational structure is meant to imply the hierarchy of various individuals within an institution to explain the decision-making process within this organization. As a result of these decisions, the institution is capable of achieving its long and short-term goals. Thus, the corporate banking sector in UAE’s HSBC Middle East Bank has the task of dealing with the problems that its corporate clients face (HSBC, n.d.). Typically, the way forward is discussed at the top tier of the structure, while the problems are divided into manageable chunks that are handed down to the specialists within the hierarchy. Throughout each level, a manager or supervisor is tasked with ensuring that the problem is solved within the capabilities of their department, which will guarantee the solution to the client’s problem in general. From the above description, one can see that organizational culture is crucial in facilitating the implementation of certain strategies or the provision of solutions to various problems through crucial decision-making.
Thus, HSBC Middle East Bank Limited has a corporate hierarchical structure that is quite important in the decision-making process. The structure includes the Chief Executive Officer, the Board of Directors, and the managers as well as all members of the bank’s staff (HSBC, n.d.). The Board of Directors is necessary for the provision of oversight for the institution. Through this Board, various pieces of legislation and policies are passed to make sure that the goals and objectives of the institution are met. The Chief Executive Officer is tasked with the daily operations of the institution by implementing the policies, agreed upon by the Board of Directors. The CEO of the UAE branch deals with the operations of the bank. Below the CEO are senior managers who represent various departments that head the different sectors of the bank. Each of these senior managers has a task of achieving set objectives, depending on their sectors and departments, which contributes to the achievement of the overall goal of the institution. Further down the hierarchy come middle-level managers who manage different units of their departments and sectors. The final group in this hierarchy is the members of the staff who deal with the clients each day and who are directly involved in performing their duties for the successful work of their institution.
Functions of Various Departments
Main Products and Services Offered by the Bank to Its Corporate Customers
Corporate customers are crucial to the existence of HSBC Middle East Bank Limited since they constitute a significant part of the clientele of this institution. As such, the bank has a variety of services to offer to its corporate clients through its Corporate Banking department. Thus, some of the services and products, are available to these clients, including asset financing and management, equity investments, capital for various investments, and ventures. One of such services of HSBC Middle East Bank Limited is transactional banking. Specifically, the institution can manage all transactions, made by its clients. Such a transactional service ranges from local to global payments according to clients’ requests. The bank also manages the cash that its numerous clients have deposited in their accounts.
Detailed Discussion of Any Three Products and Services Offered by the Department
Asset Financing and Management
Some of the clientele that HSBC Middle East Bank works with requiring the financing and the management of their various assets. Therefore, the role of the bank is to offer to finance for the procurement of such assets as heavy machinery and motor vehicles for various business operations as well as other forms of assets that would be needed. Asset financing means that the bank provides the full capital or a part of it, after which the client pays monthly installments until the bank recoups the rest of the provided amount of capital. On the other hand, asset management defines monitoring and maintaining the already available assets on behalf of the clients to ensure that such assets remain in good condition (Brigham & Houston, 2013). Therefore, HSBC Middle East Bank provides asset financing and management as a product and service to its corporate clients who require them.
Currently, one of the most complex products to offer to a bank’s clients is investment banking. This can be attributed to the crucial part that investment plays to various clients in terms of the formation of capital by ensuring that they make the right decisions on the institutions to merge with or which acquisitions to make as well as the provision of other advisory services (Besley & Brigham, 2014). Over the years, the bank under discussion has provided its clients with the pieces of advice that they need regarding making smart investments and the areas where they need to invest.
Loans By HSBC
Loans have been observed to be the main source of capital for most banks. Therefore, financial institutions offer loans to their clients depending on their needs. These loans vary from short-term to long-term ones. The bank under discussion offers loans to its clientele to either start businesses, for personal use or even in the form of mortgages to purchase houses. Such loans have different interest rates that the customers have to pay to the bank within a specified period.
Diamond Properties is a private limited company in the UAE that deals with real estate development and management. The institution was established in 2002 by a group of professionals in the field of engineering, construction, architecture, and entrepreneurship who had the vision of offering sustainable property to the UAE market (Diamond Developers, n.d.). Diamond Properties has been involved in several projects in the UAE, some of which have matured and that is already available on the market. One of their projects is the Sustainable City, launched in 2013 and meant to deliver sustainability to the environment (Diamond Developers, n.d.). This city has been constructed in several phases. Thus, during the first phase, residential units and a club were built while mixed-use development was included in this phase. During, the second phase, a hotel, a country club, and an innovation hub were built.
The Finance Department’s Organizational Structure
The Financial Department is crucial for handling the company’s finances. Typically, the structure of this department is hierarchical. The entire department is divided into several departments, each of which is in charge of performing different roles to achieve the department’s objectives. At the top of the structure is the chief financial officer whose job is the overall running of the entire department. After the chief financial officer come various sub-departmental heads. Some sub-departments include the Payroll department, the Accounts Payable department, and the Accounts Receivables department among others. They have their heads who ensure the proper functioning of their departments. Supervisors are answerable to the departmental manager and are in charge of the rest of the staff.
The Main Functions of the Department
The Financial Department in Diamond Properties has several roles that it must conduct to ensure that it achieves its objectives, set within the institution. First, the roles are given to the employees in the financial department since they form the base for the operations of the entire company. These involve recordkeeping, ensuring that the payroll is in order, providing tax and financial reports, and providing assistance when it comes to financial planning. As a result, the department is kept to provide financial needs for the rest of the departments in this company.
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Main Products and Services Used by the Company from Banks
Diamond Properties requires several products and services from banks and other non-banking institutions to advance its course. The first product includes loans from banks that such an institution takes to service its various financial needs or to partake in projects that require significant sums of money. The company also requires asset financing in terms of trucks or other construction materials that it uses in its projects. It is also necessary that non-banking institutions provide risk management services for Diamond Properties due to the kinds of projects that the firm undertakes.
Detailed Discussion of Financial Needs of the Company
Loans. Diamond Properties Limited participates in huge projects that run for long periods. Therefore, during the implementation phase of such projects, the institution requires huge amounts of capital. One of the ways that the company can source such capital is through partnerships with banks to get loans. These loans ensure that the institution can complete several phases of its project. An agreement is made between the bank and the company on how the repayment will be made.
Asset financing. In real estate development, companies require certain assets to ensure that their businesses run smoothly or that money is not spent on leasing such assets. The latter include heavy trucks and building machinery. As such, there is a need for an institution, which embarks on the business of property development, to have such assets. The financing to purchase these assets can be provided by the bank to ensure that they are available in time for such a project.
Risk management. In every project, various forms of risks are likely to occur. These risks vary from health hazards to various employees due to the nature of construction to the risks, associated with the project itself, such as destruction due to natural causes. To mitigate them, the institution should seek risk management services from financial or insurance companies (Fragnie? & Sullivan, 2007). Such financing can be provided by the financial institution or from the cash flow of Diamond Properties.
Financing is a crucial component provided to various institutions by several banks. HSBC Middle East Bank provides several services to its clients, including loans, deposits, investment banking, asset management, and financing among others. The availability of such products and services can be attributed to the structure of the institution that enables easier decision-making. One of the institutions that require financing from such an institution as HSBC Middle East Bank is Diamond Properties which is involved in real estate development. Companies of such kinds require various kinds of financing, including loans for their projects and asset financing as well as risk management. Therefore, banks play an important role in their corporate clientele bringing business to the banks. Consequently, banks’ role is to expand the various products and services that they offer to such clients, depending on their needs.