Feb 27, 2015

    HSBC bosses won't quit over Swiss unit's tax scandal


    HSBC bosses rejected calls from British lawmakers for them to quit over the bank's Swiss tax scandal, but said they had to clean up after a "terrible list" of control and compliance failings.

    HSBC chairman Douglas Flint and chief executive Stuart Gulliver said they shared collective responsibility for failings at HSBC's Swiss bank that allowed clients to dodge taxes.

    "It clearly was unacceptable, we very much regret this and it has damaged HSBC's reputation," Mr Gulliver told the Treasury Committee with regard to practices in its Swiss bank in the mid-2000s. "I am responsible for clearing it up. I have made substantial changes," he said.

    Europe's biggest bank has admitted failings in compliance and controls in its Swiss private bank, after media reports said it helped wealthy customers conceal millions of dollars of assets up to 2007.

    It adds to a long list of banking scandals that have emerged since the 2008 financial crisis, including several at HSBC.

    The bank was fined US$1.9 billion (S$2.6 billion) two years ago by the United States authorities for lax controls that allowed criminals to launder money and was also hit with a US$611 million penalty by regulators in November for alleged manipulation of currency markets.

    "It's a terrible list," Mr Flint said when a British Member of Parliament read out the recent fines and investigations.

    He said HSBC was more than halfway through a transformation to make the business simpler and create more central control. "I sincerely hope there are no more skeletons," Mr Flint added.

    He said the allegations of wrongdoing had a devastating impact on the bank's reputation that would take time to rebuild.

    This has also caused a political storm in Britain ahead of an election in May. The opposition Labour Party has criticised Prime Minister David Cameron for appointing former HSBC chairman Stephen Green as a trade minister after he left the bank.

    Mr Green was responsible, along with the rest of the management team, for the control environment at the time, but Mr Flint said the people most responsible for the Swiss bank failings were the local management.