Good housekeeping at HSBC

THERE comes a point with the big global banks when they become so sprawling in their geographical spread and activities that they almost defy analysis.

This is certainly true of Citigroup which, despite its involvement in a series of investment banking scandals in New York, sails on regardless under more or less the same management.

As far as we know, HSBC has none of the same regulatory questions looming. Indeed, new chief executive Stephen Green brought a high moral tone to proceedings at the half-year presentation.

Nevertheless, it is difficult to understand what is going in the substructure of the group. At this point, for instance, the old Midland Bank and First Direct are so buried in European activities that it is impossible to know how they are faring in competition with their British counterparts.

What we do know is that the purchase of Household is a transforming deal. It means North America is now as important as Hong Kong at the core of the business. It is also responsible for bolstering the group's exposure in personal financial services and the rise in provisions by bounteous amounts.

The effort to bring the Household skills to immigrant communities around the world will no doubt be a growth area. But longterm investors may wonder at the quality of this business compared to HSBC's traditional markets.

The beauty of having the spread HSBC now has is that embarrassments, like its expansion in Latin America almost on the eve of the most recent Argentine crisis, can be buried. Even here trends are difficult to follow because Panama and Mexico have been shifted out of the Latin portfolio into North America.

HSBC seems to have done a lot better in investment banking and financial markets than some of its competitors. Certainly, in the UK it has been active in the reshaping of the High Street and it also has done well in the issue of new debt.

Despite problems in Hong Kong, Latin American blues, fears of a personal credit bubble and the difficulties of living in a low-interest rate environment, HSBC still managed a 26% lift in pretax profits to £4.3bn. It also had the confidence to lift dividends by 17%. Critics may wonder why its cost/income ratio is still so much higher than some of the British banks, even though it is on the way down.

This would appear to represent the expense of delivering better service and global reach. It is a formula which works and HSBC shows few signs of indigestion.

Aberdeen angst
ABERDEEN Asset Management looks increasingly accident prone. As the investment manager most deeply embroiled in the scandal of split capital trusts, its activities and those of its executive team are being investigated by the Financial Services Authority.

Now the company's efforts to boost its finances by selling off Aberdeen Property Investors to British Land have turned to dust.

Aberdeen and its battle-hardened chief executive Martin Gilbert originally hoped to float API on the stock market for £120m. But with the market looking sour it opened negotiations last year for a trade sale to British Land.

This looked like a promising deal. Aberdeen would boost its capital and British Land - seen by analysts as asset heavy - would have diversified into an income-generating portfolio. Some experts even predicted this could be the start of a transformation in BL's portfolio.

Now almost nine months later the deal has come to nothing. In the first instance, Aberdeen insisted on keeping the existing Swedish managers of the Scandinavian properties within the fund in place in a move which cut the value of the deal to BL to a figure close to £45m. It subsequently became clear that the income which BL thought it was buying might be less than anticipated.

But what seems to have finally broken the transaction is the apparent demand by API executives of share and incentive arrangements which BL felt would be unacceptable to its own shareholders in these days of corporate governance scrutiny. So the deal was aborted.

The market clearly does not like Aberdeen's decision to pull out of the deal and marked the shares down sharply.

A critical step
MARKS & Spencer again has demonstrated its willingness to reach outside the company's traditional culture when something needs putting right.

The choice of Anthony Thompson from Gap to put some zip into its ailing childrenswear sales is a critical step. David Beckham notwithstanding, Thompson faces a difficult challenge.

Many parents now buy childrenswear on price and Asda is sewing up this market with its very competitive George brand.