Risk averse staff are losing us money, says HSBC

HSCB HK

As revenues and share prices plummet, HSBC’s Chairman Douglas Flint has attributed the bank’s shaky results to a nervous and over-regulated workforce.

HSBC’s revenues tumbled 9% to $31.17bn in the first half of the year, with share prices falling by 16% over the past 12 months. The banking giant has been criticised for failing to grow, although Chief Executive Steven Gulliver insists that the company has fared well given market and regulatory pressures, adding: “There are indications that interest rates could start to rise as early as the fourth quarter of 2014 in the UK and the first half of 2015 in the US, which given the size of our commercial surplus has positive implications for our revenues.”

According to Flint, intensifying regulation and compliance obligations are responsible for HSBC’s poor performance, with staff fearing individual recriminations or worse if they are seen to have made a mistake. There is “an observable and growing danger of disproportionate risk aversion creeping into decision-making in our businesses as individuals, facing uncertainty as to what may be criticised with hindsight and perceiving a zero tolerance of error, seek to protect themselves and the firm from future censure,” he said.

HSBC has been actively withdrawing from a number of countries, especially emerging markets, over the past few years, citing the risks involved. It was fined $2bn for a money laundering scandal in Mexico and continues to weather the financial fallout over mis-sold PPI, according to the Financial Times.

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