Former HSBC boss apologises for Swiss and Mexican business scandals

<p>Lord Green says he’s sorry the problems weren’t addressed earlier.</p>

Lord Green, the former boss of HSBC has apologised for problems that were raised during his tenure at the bank.

He has admitted that the company "should have drilled into" the problems more when the scandals at the Swiss and Mexican arms of the business were discovered.

Lord Green has rarely spoken about his role at the bank since he left to become trade minister in 2010. However, he has admitted to the House of Lords economic affairs committee that HSBC did not grasp the urgency of the problem in its international business units until after they were caught up in investigations for tax evasion and money laundering.

"We did a lot of acquisitions that went just fine, but nevertheless you can't help but becoming conscious of the risks. We were maybe stretching ourselves quite quickly, and with the benefit of hindshight one might reflect on some of the widsom of that," he explained.

Swiss tax evasion

Lord Green said that he believed no one was aware of an "industrial scale of tax evasion" in the Swiss private banking unit.

Last month, HSBC paid £28 million to authorities in Geneva to settle an investigation into "suspected aggravated money laundering". The bank is still under investigation in other jurisdiction and leaked documents show that the Swiss unit helped more than 8,800 British people avoid tax, reports the Telegraph.

Mexican money laundering

In 2002, HSBC acquired Bital, a Mexican bank. The deal was part of the company's push to break into the Central American market.

Lord Green explained the reasons behind the acquisition: "You could hardly ignore the fact it was an emerging market," he said and added: "There were plenty of good reasons to believe this was the kind of emerging market which HSBC has flourished in, in so many other parts of the world."

In 2012, HSBC was fined $1.9 billion for poor money laundering controls in Mexico and the US Senate said the bank had provided a channel for "drug kingpins and rogue nations".

"With the benefit of hindsight we should have drilled in more closely and more quickly on the anti-money laundering side," said Lord Green.

He also explained that checks carried out by the company did not indicate there was a "sufficiently serious problem in the bank to need very close attention very urgently, and I'm sorry about that".

Today (July 15th), at 13:00 BST, shares for HSBC Holdings were up 0.40 per cent to 574.97.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.