Page 25 - HSBC (D) Teaching Note

Culture & Fraud

DPA: Don’t do it again! Again! Again!

It cost the HSBC $1.9bn in fines and put it under a

deferred prosecution agreement (corporate probation

period). For Gulliver this meant that over the period of his

stewardship he had to ensure that HSBC and its staff

adhered to ethical standards and introduced procedures

to ensure their compliance.

In essence, Gulliver created a single company by

instituting a cultural change. This change destroyed the

historic federation of businesses through centralising

control and abandoning the regional fiefdoms that had

marked the historic structure and operations of HSBC.

December 2017 witnessed the lifting of the DPA. This

along with the cultural changes and the restructuring

made HSBC a more attractive investment prospect

especially as its slimmed down operations began to
produce results based on greater efficiencies, lower costs

and greater profitability.

The bank is hardly in the clear, having also reached a

$101.5m settlement with US authorities over attempts to

manipulate forex markets. This included a three-year

DPA, but one less onerous as there is no external monitor

for the bank.