HSBC cuts Mediterranean private bank team after drug-ring investigation
By Martin de Sa'Pinto
ZURICH (Reuters) - HSBC's (HSBA.L: Quote) private bank in Switzerland is "dramatically" cutting its north Africa and Israel teams after a former employee was convicted of laundering money for Moroccan drug dealers, it said.
Sources close to the bank said the Mediterranean and Israel business, known as Medis, had managed up to $8 billion and had between 12 and 15 staff.
"We have restructured the business dramatically. That will see the majority of clients leave," HSBC spokesman Medard Schoenmaeckers said.
He declined to say how many staff would remain.
A former HSBC banker, fired after an internal investigation last year, was convicted in January of laundering money through Swiss bank accounts for Moroccan drug smugglers, along with his brother who worked for a Geneva-based asset manager.
"We conducted a strategic review of the Mediterranean business, partly driven by internal investigations that started last year," Schoenmaeckers said. The investigation was triggered by a criminal case involving one of its bankers, he said.
Schoenmaeckers said the bank was not involved in the drug smuggling investigation and had cooperated fully with the police. He also said separate Israel teams in Zurich, Tel Aviv and New York that were not part of Medis were unaffected.
HSBC has been embroiled in a string of scandals, including allowing itself to be used to launder Mexican and Columbian drug money, manipulation of benchmark interest rates such as Libor and the mis-selling of financial products. Continued...