HSBC says Swiss scandal has brought 'shame' on bank
By Steve Slater and Matt Scuffham
LONDON (Reuters) - HSBC (HSBA.L: Quote) reported a 17 percent fall in annual pretax profit and cut its profitability target, saying allegations its Swiss business had helped customers to dodge taxes had brought shame on the bank.
Results from Europe's biggest bank on Monday reflected the cost of past misconduct and of protecting itself against the impact of further scandals. HSBC said allegations about its Geneva-based arm, raided last week by Swiss officials and now the subject of a UK inquiry, had badly damaged its image.
"A number of us, myself included, think the practices of the private bank back in the past are a source of shame and reputational damage to HSBC. I think shame would be reasonable noun to use," Chief Executive Stuart Gulliver told reporters.
Gulliver was himself thrust into the center of the scandal on Sunday when Britain's Guardian newspaper said he had sheltered millions of pounds in HSBC's Swiss private bank via a Panamanian company.
HSBC confirmed that Gulliver has a Swiss bank account and while there is no suggestion he broke any rules, the revelations come at a sensitive time. HSBC's chairman Douglas Flint is due to appear before British lawmakers on Wednesday to answer questions about the bank's alleged complicity in tax evasion.
Gulliver is among the highest paid bank executives in Europe with a pay packet last year amounting to 7.6 million pounds ($11.7 million). This is down from 8 million in 2013 after his bonus was cut to reflect the bank's failure to stamp out misconduct.
HSBC's pretax profit of $18.7 billion for 2014 was down from $22.6 billion the year before and below the average analyst forecast of $21 billion, after a $3.7 billion bill for provisions, fines and settlements arising from a range of misdeeds, including attempted manipulation of foreign exchange markets.
With the U.S. Department of Justice yet to finish its forex probe, HSBC added an extra $550 million to cover future forex-related fines and warned it could face a $500 million bill to compensate U.S. customers sold debt protection products. Continued...