The Bank of England’s top regulator has told MPs that bosses at HSBC should take personal responsibility for the scandal at its Swiss private bank, saying he had made it clear to the bank for years that it was too unwieldy to manage.
HSBC’s chief executive, Stuart Gulliver, and chairman, Douglas Flint, told the Treasury committee last week that the Swiss revelations had inflicted horrible damage on the bank but refused to take personal responsibility for its failings, including enabling tax evasion.
Flint, who was finance director at the time HSBC took over the Swiss business, infuriated members of the committee on Wednesday by blaming the failings on local managers in Switzerland and saying secrecy surrounding Swiss banking made it difficult for him to see what was going on there.
Andrew Bailey, chief executive of the Prudential Regulatory Authority, told the Treasury committee: “I find it difficult and frankly inimical to live in a world where there isn’t any allocation of responsibility. We all delegate work but you can’t delegate responsibility.”
He said: “It is very clear to me... that this question of being too complex to manage has to be dealt with. We’ve been very clear with HSBC over a number of years about this.
“As a prudential regulator, we are holding Stuart Gulliver and Douglas Flint responsible for delivering that process. I don’t think they are in any doubt that they as senior management are responsible personally for delivering the change that has to happen. I will hold them responsible, hold their feet to the fire, put their noses to the grindstone, whatever.”
Bailey said Gulliver and Flint, who was finance director from 1995 to 2010, were open with the committee about the need to put HSBC right but less clear about where responsibility lay for the Swiss affair. He said it was reasonable to ask who would have been responsible for the Swiss scandal under today’s rules.
Lord Stephen Green, chief executive and then chairman of HSBC from 2003 until 2010, has refused to answer questions about the Swiss revelations, published in the Guardian and other news organisations.
Bailey said HSBC’s federal organisation had worked well until the bank went on an acquisition spree from the late 1990s onwards.
Under the chairmanship of Sir John Bond, HSBC bought Republic National Bank of New York together with its scandal-hit Swiss arm; Bital, a Mexican bank that was used by drugs gangs to launder money; and Household, the subprime lender whose losses cost HSBC billions of pounds.
“They grew by acquisition very rapidly from the late 1990s to 2002-2003 time. It was contrary to the culture, bringing things in, and it was at odds with the federal structure,” Bailey said.
This article was written by Sean Farrell, for theguardian.com on Wednesday 4th March 2015 19.36 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010