Dec. 7 (Bloomberg) -- HSBC Holdings Plc’s private bank is sticking to its current strategy after a change in leadership, Peter Boyles, the new chief executive officer of the business, said in a memo to employees.
“You should not expect a change in direction with my arrival,” Boyles, 57, said this week in the memo, which was provided by Medard Schoenmaeckers, an HSBC official based in Zurich. “I am committed to continuing the new strategy.”
HSBC wants its private bank, which includes units in Switzerland, the U.K., Germany and Asia, to win new business by focusing on wealth created in emerging economies, onshore domestic markets and through referrals from within the firm. The private bank, which reported first-half pretax profit of $527 million, or 4.1 percent of total earnings, should contribute 5 percent to 10 percent of the company’s total pretax income, the London-based lender said in July.
Worldwide funds under management in private banking increased to $263 billion from $259 billion in the first half of this year, HSBC said. That’s 11 percent less than the $297 billion reported a year earlier. Total client assets, including deposits and non-financial assets in trusts, were $497 billion.
Boyles, who was previously CEO for continental Europe and head of commercial banking, begins his new job amid a crackdown on offshore tax evasion by the U.S. and European countries and as wealth managers compete for individuals’ assets in faster-growing regions.
Private banks are encountering “intense competition, additional costs due to regulation and compliance requirements and margin erosion,” HSBC Holdings CEO Stuart Gulliver told investors in May, adding that the traditional Swiss offshore private-banking model built on secrecy is disappearing.
HSBC’s Geneva-based unit reported a 4.1 percent drop in first-half profit and is preparing to pay a “significant fine” to resolve a U.S. Department of Justice probe of at least 11 Swiss firms suspected of helping Americans evade taxes.
The Swiss unit also suffered “reputational and financial damage” from a “substantial data theft in 2009,” Gulliver said in May, referring to Herve Falciani, a former software technician in Geneva, who stole details on Swiss accounts that were used by European countries including France, Spain and U.K. to identify tax dodgers.
“We need an open environment in which transparency is the norm, and I ask you to contact me personally when you observe anything that goes against our values or standards,” Boyles told staff in the memo published yesterday on the firm’s intranet.
U.K. tax authorities are investigating a list of more than 4,000 British residents who have bank accounts with HSBC in the offshore tax haven of Jersey. The list, leaked by a whistle-blower, includes a man who was jailed for two years after more than 300 guns were found in his house and the owner of a farm where police discovered marijuana valued at 500,000 pounds ($800,000), according to the Daily Telegraph, which first reported the document.
Boyles replaces Krishna Patel, who has quit and will leave at the end of January after 28 years at the lender, HSBC said in a separate statement on Dec. 5.
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