The aftermath of privatisation : the financial and stock market performance of HSBC Bank Malta p.l.c.

Abstract

This study investigates the aftermath of the privatisation of HSBC Bank Malta p.l.c. (HSBC) primarily by looking at its financial and stock market performance following privatisation. Financial analysis is conducted via the computation, analysis and interpretation of financial ratios over the period 1997 to 2002. Share price performance is evaluated by comparing HSBC's share price with the local and world index. Both financial and stock market performance of HSBC are analysed with particular reference to its major local competitor, Bank of Valletta (BOV). It is found that HSBC's financial results have so far improved marginally over BOV's performance. HSBC benefits from being part of a global banking giant and from having access to a pool of expertise. This fact makes it possible for HSBC to drive operational and marketing costs down. As to the share price, the privatisation of the bank has induced HSBC's share price to rise as well as other local share prices. This was mainly due to the reduction in supply in the number of shares on the market following the sale of government's shares to HSBC Group, the implied endorsement of share price levels, and the potential profit growth stemming from the operational and marketing systems of HSBC Group.