HSBC's global spread left it open to crime - CEO

LONDON Wed Feb 6, 2013 7:30pm IST

Tourists pass an HSBC bank in central London, May 8, 2012. REUTERS/Olivia Harris

Tourists pass an HSBC bank in central London, May 8, 2012.

Credit: Reuters/Olivia Harris

Related Topics


Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

LONDON (Reuters) - HSBC (HSBA.L) was forced into its biggest restructuring in almost 150 years because the bank's complex structure and wide geographical spread had made it attractive to criminals, its chief executive said.

"Our structure was not fit for purpose for a modern world," Stuart Gulliver told lawmakers on a British banking inquiry on Wednesday. "Our geographic footprint became very attractive to trans-national criminal organisations, whether they are terrorist in origin or criminal in origin."

HSBC, whose former slogan "The world's local bank" reflects its presence in more than 80 countries, was in December given a $1.9 billion fine, the largest ever imposed on a bank, following a U.S. investigation into its Mexican and U.S. operations.

The probe made scathing criticism of HSBC's anti-money-laundering systems and found its lax controls allowed two drug cartels to move $881 million through the bank.

"We've crushed our reputation with the Mexico events," Gulliver said. "The behavioural stuff of what went on in Mexico is absolutely shocking to us."

After taking the bank's helm at the start of 2011, Gulliver centralised control and created global business operations, taking much of the control out of the hands of country managers.

"It's the biggest organisational change in this firm since 1865 and we did it to deal with the weaknesses," the CEO said.

HSBC's problems in Mexico stemmed from its purchase of Grupo Financiero Bital in 2002, and Gulliver and his chairman, Douglas Flint, said the bank was too slow to improve its systems and controls.

Gulliver said some senior people had been removed from the bank for "values breaches" in the last two years, but he said there were rewards on offer as well as penalties.

The bank's chief risk officer is likely to be the fifth-highest paid person at the bank in 2012, whereas he wouldn't have been in the top 50 in 2006, he said.

The CEO has sold or exited from 45 businesses deemed non-core in the last two years, in an attempt to not only reduce complexity, but also cut costs and boost profitability.

Last week it set up a Financial System Vulnerabilities Committee to help further simplify business activities and spot risks in areas such as preventing terrorist financing or illegal drugs activities.

"We're not saying the job is done ... the people we're dealing with are highly sophisticated and will continue to change their ways of trying to penetrate the banking system," Gulliver said. (Editing by Dan Lalor and David Holmes)


After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Divestment Plans

Divestment Plans

ONGC share sale scheduled for this fiscal - oil minister.  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 



China's yuan breaks into the world's top five as payment currency - SWIFT.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage