HSBC, StanChart shares tumble after ‘FinCEN’ leak

HONG KONG (REUTERS, BLOOMBERG) – HSBC and Standard Chartered’s Hong Kong shares fell sharply on Monday (Sept 21) after media reports that they and other banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.

BuzzFeed and other media reports out on Sunday were based on leaked suspicious activity reports (SARs) filed by banks and other financial firms with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

HSBC shares in Hong Kong fell as much as 4.4 per cent to HK$29.60, the lowest since May 1995, while Standard Chartered was down as much as 3.8 per cent to HK$35.80, the lowest since May 25 this year. The Hang Seng Index was down 0.4 per cent.

The SARs, which the reports said numbered more than 2,100, were obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists (ICIJ) and other media organisations.

HSBC and Standard Chartered were among the five banks that appeared most often in the documents, the ICIJ reported.

In a statement to Reuters on Sunday, HSBC said “all of the information provided by the ICIJ is historical.” The bank said as of 2012, “HSBC embarked on a multi-year journey to overhaul its ability to combat financial crime across more than 60 jurisdictions.”

Standard Chartered said in a statement, “We take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes.”

HSBC’s share slump to below its global financial crisis low set more than a decade ago also came as pressures mount on other fronts, including political tension in Hong Kong, the fallout of the coronavirus pandemic and renewed Brexit turmoil in the UK.

Europe’s largest bank has been caught in a swirl of trouble over the past year amid political unrest and economic turmoil in its biggest market, Hong Kong. It also faces difficulties in navigating low interest rates and surging loan losses sparked by the global pandemic.

HSBC chief executive officer Noel Quinn, who took over as the bank’s permanent head in March, last month issued a stark warning about tough times ahead while reporting that first-half profit halved and predicting loan losses could swell to US$13 billion (S$17.6 billion) this year. Mr Quinn said the bank would attempt to hasten a shakeup of its global operations, accelerating a further pivot into Asia as its European operations lose money.

Struggling to boost returns, the lender has come under fire both in the West and in China as it attempts to steer through political tension. HSBC was lambasted in the US and the UK over its support for China’s new security legislation on Hong Kong, while state-backed Chinese media has voiced displeasure over the lender’s role in an American investigation of Huawei Technologies.

A jump in income from its markets business has failed to make up for broader shortcomings, unlike at some Wall Street and European competitors. HSBC stock has fallen more steeply than most big rivals this year, with Citigroup and JPMorgan Chase & Co posting declines of 44 per cent and 29 per cent, respectively.

To make matters worse, HSBC sparked anger in Hong Kong earlier this year, alienating some of its most loyal investors, after scrapping its dividend in response to the pandemic. The bank is the worst performer on the benchmark Hang Seng index so far this year.

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