HSBC Says Deeply Regrets Swiss Bank Failings
HSBC Holdings Plc (HSBA.L) apologized and said it deeply regretted past conduct and compliance failures at its Swiss private bank as it reported a 17 percent drop in annual profit on Monday.
Europe's biggest bank said recent disclosures about past practices and behavior at its Swiss private bank – where it has been accused of helping clients dodge taxes – reminded it of “how much there still is to do” at the bank.
“We deeply regret and apologize for the conduct and compliance failures highlighted which were in contravention of our own policies as well as expectations of us,” the bank said.
HSBC said it was cutting its target for return on equity to “more than 10 percent”. The previous target was to exceed 12 percent, and RoE fell to 7.3 percent in 2014 from 9.2 percent in 2013.
It reported a pretax profit of $18.7 billion for 2014, down from $22.6 billion the year before and below the average analyst forecast of $21 billion, after costs rose more than expected and its investment bank had a grim fourth quarter.
Underlying operating expenses were $37.9 billion in 2014, up 6.1 percent from the year before, showing the struggle Gulliver is having to lower costs in the face of tougher regulation and the need for more compliance staff. That continues to depress returns.
HSBC's annual report also released on Monday showed Gulliver was paid 7.6 million pounds ($11.7 million) for 2014, down from 8 million in 2013 but still likely to be one of the highest pay packets for a European bank executive.