HSBC's Chairman Douglas Flint called for an acceleration in the speed of reform within the industry as the bank was criticised by shareholders for compliance failings and accusations it aided tax avoidance. Flint told around 400 shareholders at the bank's annual meeting that the fallout from recent scandals had created a "once-in-a-generation" opportunity to reform banking and the broader financial industry.
"As a first priority we need to speed up the reform process. Otherwise investor confidence in the sector will continue to be undermined," he said. Flint also apologised to shareholders for the bank's failings after it was handed fines of $1.9 billion in December, the largest ever imposed on a bank, following a US investigation into its Mexican and US operations. The probe made scathing criticism of HSBC's anti-money-laundering systems and found its lax controls allowed two drug cartels to move $881 million through the bank.
"We were humbled and horrified to discover findings of such magnitude," said Flint. The settlement included a deferred prosecution agreement (DPA), meaning the bank's operations will be monitored but it remained exempt from prosecution unless it transgresses again. The Guardian newspaper on Friday reported a row between the US Justice Department and the judge overseeing the case. It said Judge John Gleeson is believed to be considering rejecting the deal, which could leave HSBC facing a criminal prosecution.
A spokesman for the bank said: "HSBC is focused on taking all necessary steps to fulfil its obligations under the agreements with the US and UK governments, and on implementing effective global standards across the HSBC network." HSBC, Europe's largest bank, was slammed by several shareholders for its mistakes in Mexico and accused of aiding tax avoidance by customers in countries including Switzerland and Jersey.
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