HSBC Bosses Show Humility Over Swiss Role

The apologies were fulsome, forthright and frequent: for the top two executives at HSBC, their appearance in front of MPs on Wednesday was a well-choreographed damage limitation exercise.

After a fortnight in which damaging revelations re-emerged about the tax-evading assistance provided by HSBC's Swiss private bank between 2005 and 2007, the stage was set for a bruising encounter for Douglas Flint, chairman, and chief executive Stuart Gulliver.

The Treasury Select Committee did land some blows on the two men - but they landed more heftily on HSBC's reputation.

The bank had, it repeatedly became clear during the hearing, done little to eliminate federalist instincts bred by its former leadership during the 2000s.

According to Mr Flint, that structure had allowed a dangerous lack of oversight to prevail when HSBC was making acquisitions, even in areas such as private banking, where a detailed understanding of customers was crucial.

Systems for screening clients were not sufficiently robust, while some former executives did not carry out their brief to manage the private bank as effectively as they could.

Despite those oblique references to Mr Flint's predecessor, Lord Green, there was scant attention paid to the former Trade Minister by the MPs.

Mr Gulliver himself had joined the private bank's board in 2007, but he told the Committee that that was solely to monitor the interest rate risk it was taking.

"I had no operational role in the running of the division," he said.

The chief executive, who took over in 2011, repeated many of the points he made when presenting HSBC's disappointing full-year results on Monday: that he had sold more than 70 businesses, shed more than 50,000 jobs and overhauled the reporting structure of the group's senior management.

That work, said Mr Gulliver, was bearing fruit.

On his own tax affairs, he was robust: living in Hong Kong since 1980 allied with his intention to retire and die there entitled him to the non-dom status he had held for 12 years.

"I have paid full UK tax on my worldwide earnings," he insisted.

But misdemeanours at HSBC's Swiss private bank were not the only subject of scrutiny by the MPs.

It took Andrew Tyrie MP, the Committee chairman, more than a minute to read aloud the full list of regulatory investigations and legal actions to which HSBC is currently subject.

During the period since 2011, it has set aside billions of pounds for mis-selling compensation and been forced to sign a deferred prosecution agreement with the US Department of Justice over breaches of money laundering laws.

Mr Gulliver and Mr Flint have styled themselves as the team charged with "cleaning up" the bank.

The two men undoubtedly have the backing of HSBC's biggest shareholders for the time being: but as with their counterparts across the banking industry, the clean-up job may outlast both of them.