Monday, February 22, 2016

HSBC stays in The City

We are not big fans of the HSBC bank (Hongkong and Shanghai Banking Corporation) around here.  This is an institution that was born in the imperial corruption of the British opium trade in China and they haven't done much to improve their image since.  (Tony included their criminal past in his Who Murdered Capitalism post.)

Recently, HSBC had a chance to move their legal headquarters from London to Hong Kong.  They chose London—largely because of the heavy investment they have made in corrupting the British government over the years.  The City of London is well-known for its "tolerance"  for financial crime.  The HSBC vote of confidence will only further cement this reputation.

The second article is from Reuters which claims that there are some who wish HSBC had moved their headquarters to Hong Kong so it seems there are "reasonable" people who think that it is legitimate competitor for City tolerance for criminality.  That also sounds about right.

The tragedy of allowing such a gang of criminals to make economic decisions for the rest of us is intolerable.

‘Captured regulators, impunity behind HSBC's decision to keep HQ in London’ – experts

17 Feb, 2016

HSBC’s decision to keep its headquarters in the UK is unsurprising because British regulators are captured and the City of London is the world’s leading center of financial crime, ethical finance experts have said.

British-born whistleblower Nicholas Wilson, who claims to have uncovered evidence of HSBC fraud amounting to £1 billion ($1.43bn), says the bank’s decision to remain anchored in the City was easy to predict.

Speaking to RT on Tuesday, he said the announcement signals “business as usual” for HSBC and Britain’s broken banking culture at large.

“HSBC is being sued all over the world for its crimes,” he said. “It should be no surprise that the world’s most criminal bank should stay in the world’s financial crime centre, the City of London.”

Wilson argued that the City of London and Britain's public broadcaster the BBC have been “captured” by HSBC. He said HSBC's lobbying of the Financial Conduct Authority (FCA) and Treasury is key in this context, as is HSBC's “taming” of the BBC by inserting the bank's non-executive director Rona Fairhead into the role of BBC Trust chairman.

Wilson's criticisms were echoed by ethical finance researcher Joel Benjamin, who said that HSBC has captured regulators and policy-makers in Britain's corridors of power.

“HSBC has expended significant financial and human resources to the task of infiltrating and capturing regulators and decision makers at every level of Government,” he told RT.

"This is the perfect expression of what the Tax Justice Network term the 'pinstripe mafia’ – the cabal of posh, well-heeled banksters in tailored suits running the UK economy with total impunity from the law.”

HSBC's criminal legacy

HSBC’s criminal legacy is extensive. In 2012, the bank paid $1.9 billion in fines to US authorities after it helped Mexican drug cartels and sanctioned governments to launder billions. In 2015, HSBC faced further scrutiny for allowing money laundering to occur in its Swiss subsidiary. While Swiss authorities fined it 40 million Swiss francs for its rogue conduct at the time, UK regulators failed to act.

Leaked documents subsequently revealed that HSBC’s Swiss banking arm had facilitated industrial-scale tax dodging, allowing 30,000 wealthy clients across the globe to curb their tax bills. The revelation sparked global outrage and prompted the FCA to promise an in-depth investigation into the bank’s practices.

Despite this fact, the FCA’s investigation was scrapped. Then-FCA chief Martin Wheatley was ousted from his position weeks after the probe had been announced. Although he voiced concerns over “unfinished business” with respect to HSBC, the British government refused to renew his contract.

In addition to the FCA's failure to properly investigate HSBC’s rogue practices in Switzerland, Britain’s tax regulator Her Majesty’s Revenue & Customs (HMRC) also scrapped its criminal inquiry into the bank’s conduct in January. The announcement angered critics, who said HMRC's probe had been a whitewash.

Reflecting on HSBC's public image, Benjamin said Britain has seen a partial media blackout in the face of the bank's criminal conduct.

“With HSBC executive Rona Fiarhead now running the "public interest" BBC Trust, it is very rarely that HSBC crimes even rate a mention in the UK media," he said.

Captured regulators and policy-makers

In a climate of light touch regulation, the prosecution of white collar criminals in Britain is rare. While 29 bankers were prosecuted and imprisoned for their role in the 2007-08 financial crash in Iceland, Britain’s economic meltdown failed to produce a single prosecution.

The UK has a fragmented regulatory system, consisting of regulators that are keen to pass on their responsibilities to others. Overlapping structures squander time and resources, making it difficult for regulation to be both effective and efficient.

Revelations regarding HSBC’s rogue conduct over the past decade reveal precisely how flawed Britain’s regulatory climate is. Experts argue Britain lacks sufficiently robust institutions and the political will required to tackle tax evasion and other forms of financial crime.

As British banks struggle to remain competitive in a financial system that prioritizes profit over ethics, they continue to pursue business models in which rogue conduct is ingrained. Recent examples of criminality in Britain’s financial sector, aside from HSBC’s conduct, include the miss-selling of pensions, payment protection insurance and mortgages, and the rigging of interest rates.

Both Wilson and Benjamin said HSBC’s threat of relocating its headquarters was an attempt to play the political system ahead of Britain’s 2015 general election and push for softer financial regulation

Wilson, who conducts in-depth research into financial crime, also argued that HSBC’s latest threat of relocating 1,000 staff to Paris if Brits vote for a Brexit is strategic. He said Prime Minister David Cameron’s negotiations in Brussels with regard to Britain's EU membership inevitably reflect the bank’s interests.

Benjamin, who carries out research for Debt Resistance UK, said HSBC's decision to remain headquartered in London signals a death knell for post-crisis banking reforms.

“The window for reforming criminal banks in the wake of the 2008 crash is now officially dead,” he said.

“Both the UK Government and FCA have been cowed by HSBC lobbying in recent months, with the government bending over backwards for the banks by sacking Martin Wheatley who took a firm line against City criminality.”

Benjamin also criticized Osborne’s appointment of British banker Andrew Bailey to the FCA in Wheatley’s place, and warned that the Conservative Party have been bought by HSBC.

“The Conservative Party is 51 percent funded by the City. Simon Robertson, a HSBC Executive, has personally donated more than £420,000 ($600,000) to George Osborne and the Tories,” he said.

“Osborne's family firm banks with HSBC. The chancellor’s diary confirms he has met with HSBC more than any other bank. Osborne is in hock to his City donors, and views the continued expansion of the UK financial services sector – and the wholesale mis-selling and fraud which accompanies it – as central to the UK's neoliberal growth model.” more

HSBC executives rue missed chance in HQ choice


British Finance Minister George Osborne's relief at HSBC's choice of London over Hong Kong as its headquarters is not shared by several top executives who rue a missed opportunity for its China-centered growth strategy.

With its historical roots in China -- HSBC was founded in Hong Kong and Shanghai in 1865 -- Europe's biggest lender has stepped up efforts in recent months to become chief cheerleader for Beijing's 'one belt, one road' infrastructure plan.

"A move to Hong Kong would have sent very positive signals to the region in the longer term," one senior Hong Kong-based executive told Reuters, speaking on condition of anonymity due to the sensitivity of the issue within the bank.

HSBC had a taste of what China's outbound investment drive can offer earlier this month as sole international adviser to state-owned China National Chemical Corp on its $43 billion bid for seeds and fertilizer giant Syngenta, the biggest ever overseas takeover offer by a Chinese company.

China's plan for a new silk road and economic belt, which Beijing envisages spreading from Western China to Central Asia and onwards to Europe, has echoes of The Hongkong and Shanghai Banking Corporation's original 19th century vision, when Thomas Sutherland founded the bank to meet the demands of China's growing business communities and their need for more reliable and sophisticated banking.

Fast forward 150 years and some members of HSBC's management feel a move back to its original hometown of Hong Kong would have helped the bank win more advisory business, along with the financing for some of the huge infrastructure projects expected on China's new silk road.

HSBC's history tells how Sutherland weathered a financial storm in Hong Kong in 1866 by maintaining the bank's payment period for bills of exchange when others were cutting theirs, a move which kept him in business as other banks collapsed.

After Sunday's historic board meeting in London, HSBC said that Asia remained at the heart of the group's strategy, a line a spokeswoman for HSBC reiterated when asked about any divisions within the bank's senior echelons.

HSBC insiders told Reuters the bank had taken into account Chinese sensitivities in timing the announcement of its decision to remain in the UK, waiting until the end of the lunar new year holiday.

"There are senior executives in Asia who were very excited about the possible move...I expect the bank will now do a lot of PR to reinforce the 'we love you messages' to China, having turned them down," an external source familiar with the board and management team's thinking told Reuters.

In conversations both before and after the decision Reuters spoke with nearly a dozen Asia-based executives at the bank who said they would welcome the headquarters moving eastwards.


HSBC set out a strategy last year to shift up to $230 billion of assets saved by spending cuts elsewhere to Asia, so that it could invest more in the Pearl River Delta and Southeast Asia in particular.

That gave a long-term logic for a move to Hong Kong, despite near-term headwinds such as flagging Chinese economic growth and gyrations in the country's stock markets.

But a move by Britain's Osborne to scrap most of an onerous levy on banks' global balance sheets removed one of the biggest disadvantages of having a London base, appeasing many investors who had pushed for the HQ review.

The make-up of HSBC's board also likely played a part in the outcome, said Chris White, head of equities at Premier Asset Management, which holds shares in the bank.

"If you look at the composition of HSBC's board, it's mainly European, so it shouldn't necessarily be any surprise when they decide that they ought to stay in Europe," he said.

Most prominent among the few non-Europeans on HSBC's board is Hong Kong businesswoman Laura Cha who sits on Hong Kong's Financial Services Development Council advising on how it can improve its status as a financial center. Cha also chaired discussions at the Asian Financial Forum in January on the new silk road plans.

Cha did not respond to an emailed request for comment.

Reuters was not able to ascertain from sources familiar with the meeting whether any board members initially favored a move to Hong Kong. The bank said that the board's final decision on Sunday was unanimous, and most investors now back the choice.

"If they would have decided to move to Hong Kong, I would have had to rethink my position in HSBC," said Joost de Graaf, senior portfolio manager at Kempen Capital Management, which owns shares in HSBC.

While some executives at HSBC in Asia had privately hoped for the move, both they and investors thought that outcome unlikely given China's grimmer market outlook and tightening grip on Hong Kong in recent months.

"I thought it was kind of inevitable they would stay in UK given what is going on in China - currently a Hong Kong listing does not look very attractive for a corporate executive," said an investor at one of the bank's top 20 shareholders. more

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