HSBC was forced into its biggest restructuring in almost 150 years because the bank’s complex structure made it attractive to criminals, its chief executive admitted yesterday.
“Our structure was not fit for purpose for a modern world,” Stuart Gulliver told the parliamentary commission on banking standards. “Our geographic footprint became very attractive to transnational criminal organisations, whether they are terrorist in origin or criminal in origin.”
HSBC was in December slapped with a $1.9bn (£1.2bn) fine, the largest ever imposed on a bank, following a US investigation into its Mexican and US operations.
The probe made scathing criticism of HSBC’s anti-money-laundering systems and found its lax controls allowed two drug cartels to move $881m 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 took 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,” he added.
Some senior people have been removed from the bank for “values breaches” in the last two years, but Gulliver said there were rewards on offer as well as penalties.
City A.M. Reporter