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HSBC restructures ‘to clean up act’

HSBC’s biggest ever restructuring had been necessary to simplify the bank’s complex structure and wide geographical spread, which had made it attractive to money-laundering criminals, chief executive Stuart Gulliver said yesterday.

“Our structure was not fit for purpose for a modern world,” Gulliver told legislators on a British banking inquiry.

HSBC was fined $1.9 billion (R16.8bn) in December, the largest ever paid by a bank, following a US investigation into its Mexican and US operations that made scathing criticism of its anti-money-laundering systems. The lax controls allowed two cartels to move $881 million in drug proceeds through the bank, according to US prosecutors.

“To be honest, our geographic footprint became very attractive to trans-national criminal organisations, whether they are terrorist in origin or criminal in origin,” Gulliver said.

After taking the helm at the start of 2011, Gulliver centralised control and created global business operations, taking much of the control out of the hands of regional managers.

“It’s the biggest organisational change in this firm since 1865 and we did it to deal with the weaknesses,” Gulliver said.

HSBC’s problems in Mexico stemmed from its purchase of Grupo Financiero Bital in 2002, which was bought cheaply as it was distressed. HSBC chairman Douglas Flint said that the bank was too slow to improve its systems and controls. – Reuters

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