Page 124 - Flip Banks TG

What Went Wrong

There can be little doubt, that HSBC is still associated with

fraud and money laundering. Overcoming this had been one

of the major tasks for Gulliver but he struggled to get to

grips with the string of scandals thrown up by a number of

ill-judged acquisitions dating back to before he took over in

2011e.g. the Republic Safra tax evasion scandal. Allied to
these was the bank’s corporate structure which lent itself to

potential abuse.

Interest rates were a major problem for HSBC after the

financial crisis. Dropping to zero and remaining low for

years had a detrimental effect on HSBC as most of its recent

acquisition history was in the West which during this period

did not provide an adequate return. When interest rates

normalise the potential for HSBC to generate additional

profits will kick into operation as it has a large excess of

deposits over loans, especially with its large deposit base in

Hong Kong.

HSBC was caught money laundering but it did more than

just get caught it then consciously defied the U.S.

government to stop discriminating between illegitimate and

legitimate money. In addition, it convinced the Government

to allow it to maintain its banking license thereby protecting

its business when the DPA was imposed.