The Hongkong and Shanghai Banking Corporation, the bank I love to hate, has been slapped with a $1.9 billion fine to settle a money-laundering investigation by federal and state authorities in the United States.
The "world's local bank" had taken its slogan a little too seriously, transferring billions of dollars for sanctioned nations like Iran and the Mexican drug cartels, not too mention ignoring its lax controls that opened it up to terrorist financing. In fact HSBC had promised to repair its flaws after earlier sanctions by regulators but failed to carry through.
HSBC's Group Chief Executive apologised, saying:
We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.
Easier to get forgiveness than permission, especially when so much money is on the table.
Meanwhile the bank's share prices rose as investors responded to the news; HSBC would only need to come up with US$400 million in the current quarter because it had already squirreled away US$1.5 billion in the first nine months of 2012. In other words, the bank will probably earn more in 2013.
But the bank won't pay the fine, its customers will. Now I know why banking fees have increased (ironically I now get hit with an even higher fee for transferring money to Canada), and why they will in all likelihood go up next year.
Business as usual.