James Moore: HSBC’s mea minima culpa is really about PR and damage limitation

Outlook: Mr Gulliver is a clever man and an executive of considerable skill. But that shouldn’t get his bank off the hook

If HSBC had wanted to apologise, the bank's chief executive would have used a different choice of words, James Moore writes (LAURENT FIEVET | AFP | Getty Images)

It might have been billed as an apology – the word was even used in the text. But in reality, the HSBC chief executive Stuart Gulliver’s open letter to the bank’s customers, shareholders and staff, published in certain Sunday newspapers, was something quite different. You are probably aware by now that HSBC’s Swiss private bank helped an awful lot of people to avoid, and in some cases evade, tax. This has been known for some time, but the publication of the details of some of its account-holders has taken the affair to a whole new level in terms of public consciousness.

Not only is it a scandal that has hit home with far more power than the bank’s Mexican subsidiary being used as handy washing machine for dirty cash, it has also become an election issue. Hence Mr Gulliver’s missive – an attempt to control the spin cycle which holds a place in the grand tradition of non-apology apologies.

First, consider to whom it was addressed. If Mr Gulliver and his bank really wanted to show contrition, they would be apologising not just to customers, colleagues and shareholders. They would be apologising to the citizens of this country who have been cheated out of tax revenues and the public services those revenues provide.

Then there is the explicit reference to the “historic” nature of the affair, something the bank has stressed again and again. This is one of its key messages, identified when HSBC formulated a PR plan to deal with a scandal it has known about since 2008, when Hervé Falciani did a runner with a data file while upgrading IT systems.

The problem is this: if you had committed GBH while drunk, it wouldn’t get you very far in court a few years later to plead that it was a historic offence. You might get a bit knocked off your sentence if you had demonstrated genuine contrition, faithfully attended AA meetings and not touched a drop since then, but that’s about it.

Mr Gulliver might have done a lot to change the bank from a business standpoint. He is a clever man and an executive of considerable skill. But that shouldn’t get his bank off the hook.

And there’s more. Mr Gulliver’s letter goes on to take a stab at putting “media reports” of what went on “in context”. So we are told that the Swiss unit had only 30,000 clients at its peak – not 100,000 as some of those rotters in the press have claimed. It further seeks to draw our attention to the fact that the reports have focused on 140 names (there should have been a “just” in there), many of whom have been highlighted because they are high-profile individuals, most of whom are no longer clients (ramming home the point about the scandal’s “historic” nature). Oh, and the data was stolen, as if that’s at all relevant to what we have learned about HSBC.

And so it goes on. If the bank and Mr Gulliver had really wanted to apologise, they could have said something like this: “The conduct of our Swiss unit, and the way it handled the tax affairs of some of our clients, fell below the expectations we have for our bank. We should therefore like to apologise to all those who have been affected by this, including the taxpayers of the countries concerned. We will do our best to put this right.”

I accept this might need tweaking a bit to keep the legal department happy. But it is a real apology. With even the Financial Conduct Authority now apparently taking an interest, and the French gearing up for a trial, Mr Gulliver’s letter should be read less as an apology and more as an exercise in damage limitation.

Former chief executive Sir George Mathewson stands to do well from Shawbrooke's upcoming flotation

Proof that the RBS debacle has been good for some. . .

Talking of banking scandals, there’s another brewing over the fortune that Sir George Mathewson is set to make from Shawbrook, one of the diverse band of “challenger” banks to have emerged in the wake of the 2008 crisis.

Sir George, you may remember, is a former chief executive of Royal Bank of Scotland (RBS), whose deputy was a certain Fred Goodwin. When the former stepped up to become chairman, the latter became chief executive and the bank embarked on a road that was to lead to its ruin.

Sir George stepped down in 2006, just before the industry reaped the whirlwind of its dealings in subprime debt, so he has largely escaped censure for what went on at RBS. Some might say that he cannot really be asked to bear any responsibility for the failed acquisition of ABN Amro that did so much damage to RBS, and subsequently to the taxpayer. But he was chairman of Tosca, the hedge fund that played an important role in delivering ABN to RBS during its tug of war with Barclays for the right to buy the Dutch disaster zone. Tosca profited handsomely from its dealings during the ABN takeover tussle.

Sir George then spent five years out of the limelight, only to return to take the chairmanship of the aforementioned Shawbrook, which was set up by (you’ve guessed it) RBS and financed by the bank and its private-equity arm.

As one of Shawbrook’s larger private shareholders, Sir George now stands to do very nicely out of its forthcoming flotation. So does RBS, which still has a decent-sized stake, but its return will be a mere drop in the ocean when set against the losses the taxpayer has had to pick up the tab for.

Now I’m not suggesting any wrongdoing on the part of Sir George at any time. But there appears, nonetheless, to be good reason for one banking industry source I spoke to using the word “outrageous” to describe this affair. I can’t say that I disagree with that assessment.