On March 3 it will be exactly 150 years since the Hongkong and Shanghai Banking Corporation opened for business. Normally such a milestone would prompt celebration: after all, the bank founded by colonial merchants now ranks among the world’s largest financial institutions. However, any merriment is likely to be mute. For HSBC the birthday brings challenges as great as any it has ever faced.
The bank was already on probation by the U.S. government for failing to stop money-laundering by Mexican drug barons. Now a row about Swiss tax evasion is at the top of what Chairman Douglas Flint admits is a “terrible list” of lapses and misdemeanours. Chief Executive Stuart Gulliver was this week forced to explain in excruciating detail why he set up an offshore bank account more than a decade ago. Despite three years of retrenchment, investors are wondering whether a bank of HSBC’s size and spread can be properly governed – and earn a decent return for shareholders.
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