HSBC exec resigns over probe in US

A SENIOR HSBC executive resigned yesterday amid claims by the US Senate that the bank allowed “drug kingpins and rogue nations” to launder money through its accounts.

David Bagley stepped down as head of compliance at Britain’s biggest bank in front of a Senate subcommittee after a report was released revealing HSBC had failed to heed warnings about its compliance measures.

The report said billions of dollars from Iran and Syria, Mexican drug traffickers, and Saudi and Bangladeshi banks funding terrorist groups were channelled through Mexico and offshore accounts into the US financial system.

In the latest blow to the City’s reputation, HSBC could be forced to pay as much as $1bn (£641m) to US authorities – more than double Barclays’ fines for manipulating Libor.

HSBC executives apologised in front of the homeland security and governmental affairs subcommittee yesterday after the results of a multiyear investigation into the bank’s practices were published.

Subcommittee chairman Carl Levin told executives: “The culture at HSBC was pervasively polluted for a long time.” The bank’s American branch’s president and chief executive, Irene Dorner, said “we deeply regret and apologise” for HSBC’s failings.

Bagley, who has led the compliance division for ten years, will remain at HSBC. He said: “Now is the appropriate time, for me and the bank, for someone new to serve as the head of group compliance.”

HSBC said yesterday it would “give our absolute commitment to fixing what went wrong”.