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You can find the current article at its original source at https://www.theguardian.com/business/2017/jul/31/hsbc-chief-douglas-flint-sounds-alarm-financial-crime-brexit
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| Version 3 | Version 4 |
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| HSBC chief sounds alarm over financial regulation and Brexit | HSBC chief sounds alarm over financial regulation and Brexit |
| (15 days later) | |
| Bank reports big rise in half-year profits to $10.2bn as chairman Douglas Flint calls for global regulation to keep markets safe | Bank reports big rise in half-year profits to $10.2bn as chairman Douglas Flint calls for global regulation to keep markets safe |
| Jill Treanor | Jill Treanor |
| Mon 31 Jul 2017 08.02 BST | Mon 31 Jul 2017 08.02 BST |
| Last modified on Wed 14 Feb 2018 15.35 GMT | |
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| The outgoing chairman of Britain’s biggest bank, HSBC, has called for an overhaul of financial crime detection as he sounded the alarm over the impact of Brexit and attempts to fragment global financial regulation. | The outgoing chairman of Britain’s biggest bank, HSBC, has called for an overhaul of financial crime detection as he sounded the alarm over the impact of Brexit and attempts to fragment global financial regulation. |
| Douglas Flint’s warning came as HSBC reported a 5% rise in first half profits to $10.2bn (£7.8bn) and announced a $2bn share buy-back – propelling the shares to a four year high. | Douglas Flint’s warning came as HSBC reported a 5% rise in first half profits to $10.2bn (£7.8bn) and announced a $2bn share buy-back – propelling the shares to a four year high. |
| Flint, who has been at HSBC for 22 years and chairman for the last six, used his last statement at the bank to call for the rules designed since the financial crisis to be implemented globally. He also warned on the impact of Brexit on Europe’s financial markets. | Flint, who has been at HSBC for 22 years and chairman for the last six, used his last statement at the bank to call for the rules designed since the financial crisis to be implemented globally. He also warned on the impact of Brexit on Europe’s financial markets. |
| As the bank admitted for the first time that reorganising its business for Brexit will cost up to $300m (£228m), Flint said: “The essential questions that have to be addressed are whether, at the conclusion of the negotiations, the economies of Europe will continue to have access to at least the same amount of financing capacity and related risk management services, and as readily available and similarly priced, as they have enjoyed with the UK as part of the EU.” | As the bank admitted for the first time that reorganising its business for Brexit will cost up to $300m (£228m), Flint said: “The essential questions that have to be addressed are whether, at the conclusion of the negotiations, the economies of Europe will continue to have access to at least the same amount of financing capacity and related risk management services, and as readily available and similarly priced, as they have enjoyed with the UK as part of the EU.” |
| He also warned that divergence in regulation ran the risk of “skewing” financial market activity to where the rules were less onerous, and he called for more cooperation among regulators to root out “bad actors”. | He also warned that divergence in regulation ran the risk of “skewing” financial market activity to where the rules were less onerous, and he called for more cooperation among regulators to root out “bad actors”. |
| “What is … clear is that greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts,” Flint said. | “What is … clear is that greater cooperation between the public and private sectors, together with a refresh of bank secrecy laws and regulation designed for a different age, would significantly increase the effectiveness of our joint efforts,” Flint said. |
| Among the ideas he endorsed was a mandatory register of beneficial ownership of corporate structures in every country. | Among the ideas he endorsed was a mandatory register of beneficial ownership of corporate structures in every country. |
| The City is focused on HSBC’s attempts to clean up its business after a series of scandals about the tax avoidance strategies used by its Swiss arm and the £1.2bn fine from the US Department of Justice (DoJ) for money laundering, which led to a monitor being installed at the bank as part of a deferred prosecution agreement (DPA). | The City is focused on HSBC’s attempts to clean up its business after a series of scandals about the tax avoidance strategies used by its Swiss arm and the £1.2bn fine from the US Department of Justice (DoJ) for money laundering, which led to a monitor being installed at the bank as part of a deferred prosecution agreement (DPA). |
| US lawyer Michael Cherkasky was appointed as the monitor five years ago and his concerns have prompted an investigation by the Financial Conduct Authority into potential breaches of money-laundering rules. | US lawyer Michael Cherkasky was appointed as the monitor five years ago and his concerns have prompted an investigation by the Financial Conduct Authority into potential breaches of money-laundering rules. |
| Cherkasky’s final report is scheduled for next March after which it will be up to the DoJ to decide whether the terms of the DPA have been met. | Cherkasky’s final report is scheduled for next March after which it will be up to the DoJ to decide whether the terms of the DPA have been met. |
| The results were accompanied by pages of legal warnings, including a legal case which began in April 2017 into allegations that HSBC conspired with other banks to manipulate the the US bond market. There are other disclosures covering requests for information relating to the Panamanian law firm Mossack Fonseca and investigations by tax authorities. | The results were accompanied by pages of legal warnings, including a legal case which began in April 2017 into allegations that HSBC conspired with other banks to manipulate the the US bond market. There are other disclosures covering requests for information relating to the Panamanian law firm Mossack Fonseca and investigations by tax authorities. |
| HSBC also said it was cooperating with the DoJ over the way it packaged up toxic bonds in the run-up to the 20008 financial crisis. The investigation by DoJ, which has already reached settlements with eight other banks, is nearing completion, it added. | HSBC also said it was cooperating with the DoJ over the way it packaged up toxic bonds in the run-up to the 20008 financial crisis. The investigation by DoJ, which has already reached settlements with eight other banks, is nearing completion, it added. |
| In the UK, HSBC’s results included a $300m hit for the payment protection insurance scandal. HSBC also said it had moved 170,000 accounts to new sort codes to comply with the new ringfencing protocols, known as the Vickers rules, which come into force at the start of 2019. Implementing these rules, which ring-fence high street bank operations from riskier investment banks, has cost £500m and involved 2,000 staff. | In the UK, HSBC’s results included a $300m hit for the payment protection insurance scandal. HSBC also said it had moved 170,000 accounts to new sort codes to comply with the new ringfencing protocols, known as the Vickers rules, which come into force at the start of 2019. Implementing these rules, which ring-fence high street bank operations from riskier investment banks, has cost £500m and involved 2,000 staff. |
| Stuart Gulliver, the bank’s chief executive, focused on the amount paid out to shareholders in the last year. “In the past 12 months we have paid more in dividends than any other European or American bank and returned $3.5bn to shareholders through share buybacks,” said Gulliver, who in the financial stages of a global plan to make savings of $5bn, cut 25,000 jobs and “pivot” the business towards Asia. | Stuart Gulliver, the bank’s chief executive, focused on the amount paid out to shareholders in the last year. “In the past 12 months we have paid more in dividends than any other European or American bank and returned $3.5bn to shareholders through share buybacks,” said Gulliver, who in the financial stages of a global plan to make savings of $5bn, cut 25,000 jobs and “pivot” the business towards Asia. |
| HSBC has previously said Brexit could force the bank to move moving 1,000 staff to Paris, which Gulliver said would help avoid a loss $1bn of revenue. | HSBC has previously said Brexit could force the bank to move moving 1,000 staff to Paris, which Gulliver said would help avoid a loss $1bn of revenue. |
| He reitterated his intention to retire next year while Flint said there was strong list of internal candidates. | He reitterated his intention to retire next year while Flint said there was strong list of internal candidates. |
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