HSBC executives have offered a fresh mea culpa as its chief executive found himself personally mired in the scandal surrounding allegations that the bank helped wealthy clients dodge taxes.
Europe’s biggest bank by market value said past practices at its Swiss private bank were “unacceptable” as it reported that 2014 net income fell 16 per cent to $US13.7 billion ($A17.46 billion). Meanwhile, Britain’s Guardian newspaper reported that Chief Executive Officer Stuart Gulliver had an account at the same unit.
Gulliver said he opened the account through a Panamanian company to protect his own privacy because other executives at HSBC’s Hong Kong offices were able to see what their colleagues were earning.
The account “enabled me him to have confidentiality within my own firm,” he said.
While Gulliver insisted that he had paid all tax due on the money in the account – reportedly more than STG5 million ($A9.82 million) – the Guardian’s story offered fresh embarrassment for a business reeling from allegations that forced it to publicly apologise last week.
HSBC acknowledged Monday that 2014 profits “disappointed” and said the figures included the costs of paying settlements to cover past failings. These include $US550 million ($A701 million) the bank set aside last year to cover penalties for manipulating foreign currency markets.
But Gulliver and Chairman Douglas Flint, on their first conference call since the tax avoidance scandal broke, said they should be given credit for the work they’ve done in addressing past wrongs. Flint, though, admitted in a statement the bank needed to demonstrate its “value to society”.
“The recent disclosures around unacceptable historical practices and behaviour within the Swiss private bank remind us of how much there still is to do and how far society’s expectations have changed in terms of banks’ responsibilities,” Flint said in a written statement.