HSBC "not fit for purpose" says CEO

The boss of HSBC has had a moment of clarity.

“Our structure was not fit for purpose for a modern world,” said Stuart Gulliver, the bank’s CEO. The London-based firm has recently been plagued by scandal, in which it was found to have been involved with money laundering for drug gangs and terrorist-connected organizations all over the world.


 “Our geographic footprint became very attractive to transnational criminal organisations, whether they are terrorist in origin or criminal in origin,” Gulliver told the UK parliamentary commission on banking standards. The revelations about HSBC’s business practices have stunned even the banking industry’s most cynical critics. HSBC branches in Mexico, for example, were found to be accepting cash packages from drug cartels designed to fit the precise dimensions of the tellers' windows. These gangs were known to be involved in murder, torture, and international drug trafficking as well as money laundering enabled by HSBC.

The bank was said to have been willfully blind to money laundering from the Mexican cartels, and camouflaging its dealings with countries such as Iran and North Korea, which are forbidden trade partners under US law. As a result, and in addition to its taking money from Middle Eastern terrorists from which bosses are said to have also turned a blind eye, HSBC was fined $1.9 billion by the US justice department.

“We’ve crushed our reputation with the Mexico events,” Gulliver said. “The behavioural stuff of what went on in Mexico is absolutely shocking to us.” The result will be the biggest organizational shake-up in the bank’s 150 year history. Upon taking the helm in 2011, Gulliver centralised control, taking away power from the managers of banks in 80 countries worldwide.

But since being humiliated with the largest banking fine in US history, Gulliver claims to be putting risk-management at the top of his company’s priorities. This means raising the pay of the chief risk officer, putting him in the top five earners in the bank, when previously he wouldn’t have made the top 50. It has also set up a Financial System Vulnerabilities Committee to flag-up terrorist- and drug-connected customers. But none of this will make a jot of difference, of course, if HSBC continues its culture of willful blindness.