HSBC Reputation ‘Crushed’ by Mexican Money Laundering, CEO SaysHoward Mustoe
HSBC Holdings Plc’s reputation was “crushed” after it agreed to pay $1.92 billion to settle U.S. probes of money laundering in places such as Mexico, Chief Executive Officer Stuart Gulliver said.
“I’ve been in the firm 33 years and this gives me absolutely no pleasure whatsoever,” he told U.K. lawmakers in London today. “You shouldn’t be under any illusion as to how seriously we take this and how upsetting this whole thing has been. We’ve crushed our reputation with the Mexican events.”
The settlement included a deferred prosecution agreement with the U.S. Department of Justice. The U.K.’s Financial Services Authority said the London-based bank will have to employ an independent monitor to oversee compliance with anti-money laundering requirements.
HSBC’s Mexican branches had become so well-known to drug traffickers as the place to launder proceeds from illicit sales that cartels began using special boxes to speed transactions, U.S. prosecutors have said.
“We bought a bank in Mexico, we bought cheaply because it was in distress,” Gulliver, 53, told the Parliamentary Commission on Banking Standards. “We ourselves were too slow to put in place anti-money-laundering systems that were up to the standards required today.”
Since being promoted to CEO of Europe’s largest bank by assets in January 2011, Gulliver said he has improved the bank’s country management structure, in place since the bank’s foundation in 1865.
“I do not believe this bank is too big to manage,” he said. “If you are large and complex, yes, I can appreciate the challenge, but if you are large and reasonably straightforward I believe you can manage these things.”
The lender’s chief risk officer, Marc Moses, will be the fifth best-paid in the group, pending board approval, according to Gulliver. In 2006, that role “wouldn’t have been in the top 50, so there is someone who’s clearly being rewarded for stopping things,” he told lawmakers.
-- Editors: Simone Meier, Steve Bailey