HSBC Chairman urges acceleration of bank reform

LONDON Fri May 24, 2013 7:44pm IST

Douglas Flint, Group Chairman of HSBC Holdings attends the annual meeting of the World Economic Forum (WEF) in Davos January 26, 2013. REUTERS/Denis Balibouse/Files

Douglas Flint, Group Chairman of HSBC Holdings attends the annual meeting of the World Economic Forum (WEF) in Davos January 26, 2013.

Credit: Reuters/Denis Balibouse/Files

Related Topics


A statue of Ganesh, the deity of prosperity, is carried in a taxi to a place of worship on the first day of the ten-day-long Ganesh Chaturthi festival in Mumbai August 29, 2014. REUTERS/Danish Siddiqui

Ganesh Chaturthi Festival

During Ganesh Chaturthi idols will be taken through the streets in a procession accompanied by dancing and singing, and will be immersed in a river or the sea in accordance with Hindu faith.  Slideshow 

LONDON (Reuters) - HSBC's (HSBA.L) (0005.HK) Chairman Douglas Flint called for an acceleration in the speed of reform within the industry as the bank was criticised by shareholders for compliance failings and accusations it aided tax avoidance.

Flint told around 400 shareholders at the bank's annual meeting that the fallout from recent scandals had created a "once-in-a-generation" opportunity to reform banking and the broader financial industry.

"As a first priority we need to speed up the reform process. Otherwise investor confidence in the sector will continue to be undermined," he said.

Flint also apologised to shareholders for the bank's failings after it was handed fines of $1.9 billion in December, 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 were humbled and horrified to discover findings of such magnitude," said Flint.

The settlement included a deferred prosecution agreement (DPA), meaning the bank's operations will be monitored but it remained exempt from prosecution unless it transgresses again.

The Guardian newspaper on Friday reported a row between the U.S. Justice Department and the judge overseeing the case. It said Judge John Gleeson is believed to be considering rejecting the deal, which could leave HSBC facing a criminal prosecution.

A spokesman for the bank said: "HSBC is focused on taking all necessary steps to fulfil its obligations under the agreements with the U.S. and UK governments, and on implementing effective global standards across the HSBC network."

HSBC, Europe's largest bank, was slammed by several shareholders for its mistakes in Mexico and accused of aiding tax avoidance by customers in countries including Switzerland and Jersey.

Flint said the bank was reviewing its operations in so-called tax havens and expects a significant reduction in the amount of business it does in those jurisdictions, though he said legitimate business is done there.

"We are co-operating with tax authorities as they seek out if there is tax unpaid by individuals," Flint said. "We will make ourselves as bulletproof as we can in this area."

Almost 90 percent of HSBC's shareholders backed its 2012 pay plan for executives at the meeting. Including abstentions, 14.7 percent of shareholders failed to back the plan.

CEO Stuart Gulliver was paid 7.4 million pounds last year, down from 8 million for 2011. The bank paid 204 employees more than 1 million pounds last year, including 78 in Britain.

Shares in HSBC were down 1.8 percent at 1215 GMT, underperforming the European banking index .SX7P, which was down 1 percent.

Gulliver this month unveiled plans to redouble his cost-cutting efforts to save up to $3 billion in annual costs by 2016, on top of $4 billion he has already cut since taking over in 2011.

In the face of weak demand in Europe, HSBC plans to increase revenue by focusing on high-return markets in Asia, where it now generates around two-thirds of its profit. (Editing by Sinead Cruise and David Cowell)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye




Factory activity expands at slower clip in August.  Full Article 

Modi in Japan

Modi in Japan

Japan aims to double India investment in 5 years - Nikkei  Full Article 

Market Outlook

Market Outlook

Indian shares headed for correction, but outlook strong - BofA Merrill.  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Reuters India Mobile

Reuters India Mobile

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