British bank HSBC reported a plunge on its profits and shares as it faces trying times amidst CEO Stuart Gulliver and tax avoidance scandals.
According to the Deutsche Welle website, the bank's net profits sank to $13.7 billion (12 billion euros) in 2014, down from $18.7 a year earlier. Operating costs had also risen 6.1 percent to $37.9 billion. Its shares, meanwhile, dropped to around 6% to 566.935p in the market open.
A report also mentioned that the investors are not too happy with the current state the bank is in. They cited fines, settlements, UK customer redress and associated provisions as main factors of investor dissatisfaction. This includes the hefty fines they paid to settle a foreign exchange rate rigging accusation last year.
Already the financial institution is treading hot water with two big issues they are facing this year.
Earlier, HSBC issued an apology regarding claimed allegations known as "SwissLeaks". It claims that the bank is using its Swiss division to help its clients whose accounts contain 180 billion euros ($204 billion) around the world to avoid taxes.
In a statement, Gulliver admitted that some of the practices of HSBC’s Swiss private banking arm in the past had been “a source of shame and reputational damage” and said he considered them “very unacceptable”.
And then just last Sunday the Guardian, a local British newspaper, exposed a scandal about the CEO's hidden £5 million of his own money on one of its Swiss accounts under an unknown Panamanian company. The report also states that Gulliver is still tax domiciled in Hong Kong despite being based in the UK.
Gulliver and his representatives denied any illegal usage of the accounts.
In response to these claims, they explained that the HSBC Suisse accounts were used to hold the executive's bonuses prior to 2003 when Gulliver transferred from Hong Kong to the bank's headquarters in London. This is where Gulliver gets his bonus payments from.
The representatives gave no answer when questioned why Gulliver used a dummy Panamanian company under the name Worcester Equities Inc for confidentiality purposes when Swiss accounts already provided a blanket of security.
It is was said that the bank executive had a balance of $7.6 million in 2007.
