HSBC said its private bank in Switzerland will need to help shoulder as much as $1.5 billion to settle various tax disputes including a recent one by Asia officials.
Britain's HSBC said its Geneva-based private bank and other subsidiaries may be fined a total of $1.5 billion by tax authorities in the U.S., Belgium, Argentina, and most recently, India. The four countries all allege that HSBC helped wealthy clients shield their funds from the tax collector.
London-based HSBC has stowed $604 million in funds towards settling the various probes. Three months ago the bank agreed to pay 300 million euros in France to settle a long-running tax investigation.
India Scrutiny
«Management’s estimate of the possible aggregate penalties that might arise as a result of the matters in respect of which it is practicable to form estimates is up to or exceeding $1.5 billion, including amounts for which a provision has been recognized,» HSBC said in its annual report, released on Tuesday.
Of the four investigations, the Indian probe is the most recent. The bank was first summoned in India three years ago, then its Swiss bank and a Dubai branch were told officials had enough to pursue charges for helping four Indian families dodge taxes. HSBC said it is cooperating with authorities.
On the Hook Criminally
HSBC's involvement in the U.S., Belgian, and Argentinian probes were already known. In the U.S., HSBC ended up as one of a handful of banks including Wegelin, Credit Suisse, and Pictet in the crosshairs of prosecutors.
The bank tried to enter a Swiss government-brokered program with American justice officials five years ago, only to be told it was too late – HSBC was already on the hook criminally.
Loss-Making Swiss Unit
The Swiss banking unit, led by former UBS banker Franco Morra (pictured above), reported a hefty pretax loss of $184 million last year, hit by the French fine as well as provisions for the pending ones. The bank has shrunk dramatically in recent years, after withdrawing from some markets and offloading undesirable clientele.
The parent bank's recent history has been scandal-tarnished: in 2012, HSBC received a then-record $1.92 billion fine in the U.S. over running Mexican drug money as well as for violating sanctions and dealing with regimes in Iran, Libya, Sudan, Burma, and Cuba. Three months ago, it also clocked a record fine in Hong Kong for selling methods linked to Lehman Brothers products in the run-up to the financial crisis.
