HSBC has completed the scaling back of its scandal-hit private banking operation by pulling out of Monaco.
Britain’s biggest bank has been reducing its services to wealthy individuals after tax scandals at its Swiss banking arm and its dealings with Panamanian law firm Mossack Fonseca.
The move is an attempt by HSBC’s chief executive, Stuart Gulliver, to reduce the financial and reputational risks facing the bank, which formerly had dealings with customers in 150 countries around the world. That has now been reduced to 50 countries, with the private bank refocusing on major centres in London, New York, Geneva, Singapore and Hong Kong.
The last step is pulling out of Monaco, where HSBC’s clients are to be referred to CFM Indosuez Wealth Management, which will become the largest bank in the principality.
“It draws to a close the restructuring of our European private banking operations, with the future focus being on growing our business with strategic clients of the group,” the bank said of the move.
“It is intended that the remainder of HSBC’s Monaco business will be subsequently wound down, after alternative arrangements have been made for any clients who do not transfer under the agreement.”
Private banking operations in Japan, Panama, Israel, Bermuda, Brazil, Mexico and Turkey have been closed or sold since January 2011 when Gulliver took the helm. The operations being sold off had already met transparency rules on tax and money laundering.
HSBC embarked on a major expansion into private banking in 1999 by acquiring the Republic National Bank of New York and Safra Republic Holdings. HSBC has argued that these operations were allowed to operate with different cultures and standards to the wider group at a time when rules for private banking were demanding less secrecy.
A hack of its Swiss operation’s 30,000 accounts in 2007 showed how the bank helped wealthy customers dodge taxes and conceal millions of dollars of assets, including doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities.
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