HSBC crisis latest in bank brand knocks
Despite recent studies listing HSBC among the world’s top-ranking banks in terms of brand value, recent revelations are bound to be destructive.
The ongoing tax scandal surrounding HSBC is occurring on an international scale with over 203 countries allegedly involved in HSBC’s Swiss operation. Authorities in a range of countries, including the US, Belgium, France, Argentina and Switzerland itself, are examining HSBC’s actions in helping more than 100,000 wealthy individuals avoid paying tax.
UK-based HSBC has said that it is, “Co-operating with relevant authorities”. It admits that it was “accountable for past control failures.” But has said that it has now “fundamentally changed”.
HSBC adds, “We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today.”
While it remains to be seen whether HSBC will face charges or not, there is no doubt that its global brand will be sorely knocked by this sequence of events. This is not the first time HSBC has had to deal with scandal in recent years. It has had to pay settlements on a series of occasions due to malpractice. This latest scandal came to light when a whistle blower brought the findings to the attention of global media.
However, HSBC is not the only bank to face scandal, many major bank brands have suffered in the years following the pre-2007 boom. In 2013, Switzerland’s oldest bank, Wegelin, closed permanently after admitting to allowing more than 100 American citizens to hide $1.2bn from the Internal Revenue Service for almost 10 years.
Franco Morra, chief executive of HSBC’s Swiss Private Bank, says, “HSBC’s Swiss Private Bank began a radical transformation in 2008 to prevent its services from being used to evade taxes or launder money. New senior management have comprehensively overhauled the business, including closing the accounts of clients who did not meet our high standards and ensuring we have strong compliance controls in place. These disclosures about historical business practices are a reminder that the old business model of Swiss private banking is no longer acceptable.”
Post-recession banks are subject to much closer observation, though many still claim that this hasn’t gone far enough. Banks have a huge challenge ahead of them if they want to win back the public’s trust.