HSBC “disappointed” last year, its chief executive admits, as the bank reports a 17 per cent drop in profits following the recent tax avoidance scandal.
Despite the poor year for the bank, Stuart Gulliver earned £7.6m which includes a bonus of £1.3m. This was reduced from £1.8m the previous year due to the bank being fined over failing to prevent rigging of foreign exchange operations.
The drop in profits comes after $2.4bn of fines and customer compensation costs were given out. This contributed towards the bank’s shares falling more than 5 per cent, to their lowest level for nearly three years, although it still held on to a healthy £12.2bn profit.
Documents leaked by whistleblower Herve Falciani in 2007, obtained by French newspaper Le Monde, reveal information about around 30,000 secret Swiss bank accounts which the bank used to help customers dodge taxes. Sports stars, celebrities and politicians are alleged to own some of these accounts.
It also emerged on Monday that Mr Gulliver had a Swiss bank account, with claims he used HSBC’s private bank in Geneva, via a Panamanian company, to shelter a bonus he was paid.
HSBC is ranked eighth in the top 25 banks worldwide, based on assets. Lord Ken Macdonald, the former director of public prosecutions, said that there are strong grounds to investigate the bank for “cheating”.
More than 100,000 people from around the world are thought to have additional bank accounts to hide money. HSBC has admitted failure and has said that action has been taken; it has “implemented numerous initiatives designed to prevent its banking services being used to evade taxes or launder money”.
HM Revenue and Customers has been under fire from MPs, who have criticised it for its slow progress, following just one prosecution of a British tax evader to date, even though there are details of over 7,000 British clients who are suspected of trying to evade tax.
Tax evasion is already illegal in the UK although there are no laws surrounding assisting a tax evader. Chief Secretary to the Treasury, Danny Alexander, said that codes of practice for those who advise on tax affairs should be strengthened.
He said he hoped new measures are in place before the May election. If not, they would be part of the Liberal Democrat manifesto.
Timeline of events 9 Feb: Leaked accounts reveal HSBC helped customers to dodge tax, including celebrities 9 Feb: Politicians launch inquiry into tax claims at HSBC 11 Feb: Lord Fink denies allegations that he was involved 12 Feb: Britain's Serious Fraud Office said it was open to discussion over HSBC 14 Feb: Lord Green (previous HSBC chairman and minister) steps down as chairman of TheCityUK's advisory council 15 Feb: Bank issues apology regarding the tax avoidance scandal 18 Feb: Geneva HSBC offices searched 23 Feb: HSBC reports 17 per cent drop in profitsâ??