HSBC chief: ‘Our structure was not fit for purpose in a modern world’
Douglas Flint defends trading activity, saying it can be governed ethically
10.28 John Thurso, MP asks can bankers behave in a professional way amid a culture of trading. Mr Flint responds:
Capital market activity should not be regarded as a bad thing. There is no reason that can’t be done responsibly, ethically and in support of the community served by the banks. It’s perfectly possible to have an ethical culture within markets businesses.
10.23 Mr Flint is telling the commission about HSBC’s YouTube channel, which features Mr Gulliver talking about the bank’s culture. He says it’s been watched by 180,000 people.
10.19 Over to Andy Love, MP, who’s interested in how they go about creating cultural change – HSBC’s so-called ‘courageous integrity’ approach.
Stuart Gulliver is describing how senior managers are appraised on their values every half year. He says three subordinates, three peers and three higher-ups opine on the individuals values.
We have removed senior people at HSBC for value breaches on my watch.
Mr Gulliver insists the bank is no longer too big to manage
10.13 Stuart Gulliver is reiterating the point that he has moved the bank along from its past.
We’re not saying the job is done – this is a permanent journey. The people we are dealing with [financial criminals] are sophisticated. We have re-organised HSBC. We have implemented the highest standards, which are the US standards, everywhere in the world.
We’ve recruited a completely new team of legal and compliance people. I have sold 43 businesses to remove complexity from the firm. We’ve never before disposed of businesses.
I do not believe this bank is too big to manage or too big to control [any more]. We’re doing about 50 activities globally. The disposals are to remove things not logically linked.
10.07 Mr Gulliver is explaining organisational overhauls at HSBC to address gaps which allowed money-laundering to occur through the bank, which he described as “the biggest organisational change since 1865”, adding, “Our structure was not fit for purpose in a modern world.”
10.03 Lord McFall is asking why no heads have rolled over the Mexican money laundering issue. Flint responds that the board takes collective responsibility for issues at the bank, and anyway, people closest to the money-laundering problem are no longer with the group.
Lord John McFall
10.00 Lord McFall is asking about money-laundering in Mexico via HSBC banks, which resulted in a £2bn fine on the bank. Mr Flint said:
Certain of the standards we believed were being applied globally were not being shared and escalated as well as they shoudl have been. There were things we were not aware of.
09.56 Mr Flint answers a question on whether tough regualation makes it too difficult to do business:
Tough but fair regulation is a comparative advantage. The US has a tough system and it has a particularly penetrating examination of failure. It’s the way it is. We should aspire to have a tough, fair system here.
09.55 Asked on whose repsonsibility it is to absorb losses made by banks, Douglas Flint has said:
It’s going to be a dialogue between the institution and regulator and ultimately the Treasury. It’s the Treasury which must decide what proportion of risk it should bear. It’s reasonable to ask the institution to demonstrate there is no risk. The test should not be one of absolute certainty but one of reasonably forseeable risk. The deliberation should take place at the institutional level, board level and government level. These will be judgements as much about the people as it will be about the detailed facts and figures.
09.52 Andrew Tyrie has just opened the meeting. He’s asking whether the HSBC boses support the ‘electrified’ ring-fence on banks. Douglas Flint responds:
It’s quite reasonable for there to be a sanction, yes we should support that.
09.46 Good morning. Here we’ll be giving a blow-by-blow account of HSBC bosses before the Parliamentary Commission on Banking Standards.