3:12 pm - Friday November 6, 2015

HSBC says sorry over past standards at Swiss bank

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HSBC apologized to customers and investors on Sunday for past practices at its Swiss private bank after allegations that it helped hundreds of clients to dodge taxes.

Europe’s largest bank said in full-page advertisements in British newspapers that recent media coverage that focused on the Swiss operation and financial affairs of some of its clients had been a painful experience and that standards in place today “were not universally in place” in the past.

“We therefore offer our sincerest apologies,” the advertisement said. It is addressed to customers, shareholders and colleagues and is signed by Chief Executive Stuart Gulliver.

Most of the message echoes an email sent to staff on Friday, when Gulliver said that the bank had sometimes failed to live up to the standards expected of it.

HSBC has admitted failings in compliance and controls in its Swiss private bank after the media allegations that it may have enabled clients to conceal millions of dollars of assets, though Gulliver said that many people alleged to have been customers had long since left and some never were clients.

The disclosures have sparked a political row in Britain over practices at HSBC and whether tax authorities had done enough to pursue possible wrongdoers.

Britain’s Treasury Committee has called the bank’s chairman and chief executive to give evidence on the matter on Feb. 25, according to a memo seen by Reuters on Friday.

‘EXPLANATION NEEDED’

Business minister Vince Cable said that he is seeking reassurance that such practices have been consigned to history.

“It’s one thing to say that these things happened 10 years ago, and we do need a proper explanation of that, but what is absolutely essential is that the practices are not continuing,” Cable told the Murnaghan show on Sky News, adding that he had written to HSBC.

Cable also said that the tax authorities need to take a firmer approach.

“The treatment of small people and poor people is very severe, but the big fish — the companies and rich individuals — are not being treated as seriously,” Cable said. “That is wrong and it must change.”

The revelations have proved embarrassing for a government that included HSBC’s former boss Stephen Green as minister for trade from 2011 to 2013.

“(Green) hasn’t yet spoken on his role in the matter and I would certainly like him to do so,” Cable said on Sunday.

Green stepped down as chairman of financial services lobby group TheCityUK on Saturday.

The bank said that the vast majority of the 140 people named in reports as customers of its Swiss bank had left and that it has since established much tighter controls on who it accepts as customers.

“We have absolutely no appetite to do business with clients who are evading their taxes or who fail to meet our financial crime compliance standards,” Gulliver said.

Opposition Labour leader Ed Miliband said on Saturday that he would implement a “root and branch reform” of tax authorities’ approach to avoidance if Labour wins the next election.

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