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HSBC boss 'profoundly sorry' over money laundering and mis-selling

HSBC is the latest bank to grovel to customers and investors after scandals in the UK and US dent profits and tarnish its reputation.

HSBC boss 'profoundly sorry' over money laundering and mis-selling

HSBC has become the latest bank to grovel to its customers and investors after scandals in the UK and US dented half-year profits and more importantly damaged its reputation.

Chief executive Stuart Gulliver said he was ‘profoundly sorry’ after the bank made $2 billion (£1.3 billion) of provisions for mis-selling in the UK and for its role in a big money-laundering scandal in the US.

The bank has more than doubled its provisions against payment protection insurance (PPI) mis-selling to $1 billion. It has also set aside $246 million for potential compensation to business customers who were mis-sold complex and costly interest rate swaps as another form of loan insurance.

This follows similar moves on PPI and interest rate swaps by Barclays and Lloyds last week.

Like other banks, HSBC is helping regulators with their inquiries into Libor rate rigging, which could result in fines, although the bank said it was too early to say.

However, it is the US money laundering where its shame is deepest and where it is out on its own. Here the bank has made initial provisions of $700 million to meet the legal and regulatory costs of a probe into money laundering which saw $7 billion transferred from Mexico to the US in 2007 and 2008. A US Senate report this month criticised the bank’s ‘pervasively polluted’ culture.

The revelations have dealt a blow to the bank’s reputation as one of the best run banks in the world. HSBC is a member of Citywire Top Stocks through its top 10 position in the M&G Recovery fund run by Tom Dobell.

Gulliver told reporters on a conference call: ‘What happened in Mexico and the US is shameful, it’s embarrassing, it’s very painful for all of us in the firm.’

Chairman Douglas Flint said in a statement accompanying the results: ‘We cannot undo the mistakes but I can assure you that Stuart Gulliver and I are determined, and have made it our most important priority, to strengthen HSBC and reinforce our values.’

The provisions helped knock underlying profit before tax in the first half of the year 3% lower than a year ago to $10.6 billion.

Reported pre-tax profit was 11% higher at $12.7 billion, but this included $4.3 billion gains from disposals and $2.2 billion of accounting losses from falls in the price of its own debt.

Underlying revenues grew 4% in Hong Kong, Asia Pacific and Latin America, with profits in Hong Kong and Asia accounting for two-thirds of the group’s profits.

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9 comments so far. Why not have your say?

Richard W Green

Jul 30, 2012 at 13:18

It's all very well being, "profoundly sorry", but the real question is, "Did the Chief Executive and Chairman know and if not, why not?" Then shareholders can decide whether they are fit to continue, or force them to resign.

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Geoff Harrop

Jul 30, 2012 at 14:20

Just as in any Law Court - if the burglar says sorry and gives something back he is let off with a caution. Or perhaps this is different.

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tony G.

Jul 30, 2012 at 14:27

As usual " Sorry we were caught"

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Michael Mason-Mahon

Jul 30, 2012 at 18:09

My Shame of Mr Flint as Chairman and the Board of Directors.

Courageous Integrity or just Cowardice?

Michael Mason-Mahon Shareholder

Mr Flint must go and go now.

Mr Flint (Chairman), Mr Gulliver (CEO), Lord Green (ex-Chairman), Michael Geoghegan (ex-CEO), Rona Fairhead Board Director (CEO FT Group) and Mr Sam Laidlaw Board Director (CEO Centirca) and the rest of the Board of Directors of HSBC Holdings Plc.

The Penalty should be a $ 4 Billion Fine and Suspend their Banking Licence for 1 year.

Should criminal action be taken against the above people? Has Mr Flint and Mr Gulliver brought their office into disrepute?

As Mr Flint was the Finance Director at the time and now as Chairman, should Mr Flint be held responsible for this criminal behaviour?

What are our Board of Directors doing besides staying silent, is this their Courageous Integrity or is it Faint heartedness (Cowardice)?

Will Mr Flint do the right (as per HSBC Values see page 9 Annual Report) and resign?

Will Mr Flint restore some of the reputation of HSBC (he talks about so much) and resign today?

At the age of 55 these people have made me ashamed not only to be British, ashamed to be a human being, by their actions and inactions. Please go to youtube: stop cheating bankers

When myself and others complained to the FSA about Mr Flint providing false information to shareholder, not telling the truth about complains in India (Does this make the Chairman a liar?)

Richard Hennity General Counsel HSBC Holdings Plc, reply to questions by MP Teresa Pearce, this part of his reply in question four.

(We are not aware of any complaints being made about HSBC India to the FSA except by a shareholder activist called Michael Mason-Mahon.)

Why would HSBC Holdings Plc allow/accept an activist to represent their own customers?

Their customers want my help because they cannot trust this Organisation.

It is my personal belief and experience that Mr Flint as Chairman has very serious problems with telling the truth, even when he should be telling the truth (what he can?) he will still not tell the truth.

Flint saying "‘We cannot undo the mistakes" there not mistakes it is just plain illegal to launder money.

Mr Flint you are the MISTAKE and a very bad MISTAKE at that, just ask customers in India about you.

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Michael Mason-Mahon

Jul 30, 2012 at 18:11

Mr Flint Chairman of HSBC Holdings Plc how clean is his hands?

People in India have trusted HSBC only to be abused and had their lives and reputaions ruined.

Did Mr Flint act with Courageous Integrityt or with Cowardice? You decide.

Only today after speaking to Mr Hennity (Legal Counsel) he says the Board of Directors should not be contacted concerning HSBC India and their illegal behaviour as HSBC Holdings Plc is just a Holding Company?

As Mr Gulliver is the Chairman of The Hongkong and Shanghai Banking Corporation Limited and CEO of HSBC Holdings Plc, like Mr Flint the Board of Directors are fully aware of what is going on in India.

Their treatment of people in India, I have found to be horrendous and disgraceful, it is my personal belief a criminal investigation should take place, concerning the behaviour of and Mr Flint (Lord Green ex-Chairman) also the Board of Directors of HSBC Holdings Plc and The Hongkong and Shanghai Banking Corporation Limited in India.

My question is simple should any decent society have to accept the following behaviour, money laundering, miss selling to the elderly, threatening to ruin people's lives if they do not pay, falsely registering people with CIBIL and taking money which they are not entitled to?

Should any decent society have to accept the behaviour of HSBC Holdings Plc, Mr Flint (the Chairman) and the Board of Directors Lord Green (ex-Chairman), Michael Geoghegan (ex-CEO)?

Please go to youtube: stop cheating bankers.

Then see the real Flint and Gulliver's behaviour then you decide should Flint be the Chairman?


Michael Mason-Mahon



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Hugh Simmonds via mobile

Jul 30, 2012 at 18:24

When will the authorities commence a criminal investigation into this matter? Or will the banks be allowed to get away with unlawful behaviour yet again? I think we know the answer; it is shameful what has been allowed to happen.

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mo khan

Jul 30, 2012 at 21:54

BANKERS 'profoundly sorry', then LIBOR, laughing all the way,. not trust worthy.

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Jul 30, 2012 at 22:36

Why is it that that less than squeaky clean bank business almost invariably has its roots in N America?

I'm amazed there's no-one in HSBC who remembers how Midland Bank messed up over there and were forced to sell out to HSB.

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Jul 30, 2012 at 23:03

Wasn't this going on for years rather than just a one-off thing? Then there's all the other scandals I've read they've been involved in: sub-prime at Household in the US, NHFA, Euribor, interest rate swaps. Have they apologised for all those too? I'll be keeping my distance from them.

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