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Bank pledges further reforms

HSBC profits slump as Flint apologises for ‘unacceptable’ practices and behaviour

Douglas FlintHSBC unveiled a 17% fall in annual profits today in a statement laced with apologies for the recent scandal surrounding its Swiss private bank.

The world’s second biggest bank, which was accused of helping wealthy clients avoid tax in their domestic economies, said it was working to eradicate bad practices and make its operations more manageable.

Chairman Douglas Flint said: “Restoration of trust in our industry remains a significant challenge as further misdeeds are uncovered but it is a challenge we must meet successfully. We owe this not just to society but to our staff to ensure they can be rightly proud of the organisation to which they have committed their careers. When commentators extrapolate instances of control failure or individual misconduct to question the culture of the firm it strikes painfully at the heart of our identity.

“‘The recent disclosures around unacceptable historical practices and behaviour within the Swiss private bank remind us of how much there still is to do and how far society’s expectations have changed in terms of banks’ responsibilities.

“They are also a reminder of the need for constant vigilance over the effectiveness of our controls and the imperative to embed a robust and ethical compliance culture.

“We deeply regret and apologise for the conduct and compliance failures highlighted which were in contravention of our own policies as well as expectations of us.

“In response to, and in parallel with, the tax investigations prompted by the data theft more than eight years ago, we have been completely overhauling our private banking business, putting the entire customer base through enhanced due diligence and tax transparency filters. Our Swiss Private Bank customer base and the countries we serve are now both about one‑third of the size they were in 2007.

“In addition, HSBC is already working to implement the OECD’s Common Reporting Standard and other measures to foster greater transparency. We cannot change the past. But, looking to the future, we can and must reinforce controls and provide demonstrable evidence of their effectiveness. This forms part of our commitment to Global Standards, to ensure that we will never knowingly do business with counterparties seeking to evade taxes or use the financial system to commit financial crime.”

Chief executive Stuart Gulliver said:  “There are still a number of historical issues left to resolve and we will make further progress on these in 2015. We will also continue the work we started in 2011 to simplify the group to make it easier to manage and control.

Group pre-tax profit fell from $22.6 billion to $18.7bn.

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