HSBC Has a Very Serious Problem

Posted by Ed 27 days ago
If it looks like a gangster... and smells like a gangster...  and acts like a gangster...  then....
Today, it wasn’t just banking stocks that had a rough day. European stocks overall were down by 3.9%, as concerns grow over a second wave of the coronavirus.
But banks were particularly hard hit.

One reason for the rout was the release of a report by the International Consortium of Investigative Journalists on lenders that had facilitated $2 trillion in suspicious transactions. HSBC, Deutsche Bank, Standard Chartered, JPMorgan Chase, and Bank of New York Mellon, were implicated.

Over almost two decades, the five banks had “enrich[ed] themselves and their shareholders while facilitating the work of terrorists, kleptocrats, and drug kingpins,” the report said.

Here’s a sampling of how the bank stocks reacted:

  • ING: -9.27%.
  • Deutsche Bank: -8.76%
  • BNP Paribas -6.37%
  • Santander: -6.22%:
  • Unicredit: -6.17%
  • HSBC: -5.26%


Deutsche Bank appears to have facilitated more than half of the leaked $2 trillion of transactions, which were flagged to the U.S. government but rarely read by investigators, let alone acted upon, according to Deutsche Welle. Experts said that some banks treat Suspicious Activity Reports (SARs) “as a kind of get-out-of-jail-free card”, filing “numerous reports on the same clients, detailing their suspected crimes over the course of years while continuing to welcome their business.”

HSBC is alleged to have allowed WCM777, a particularly pernicious Ponzi scheme, to move more than $15 million despite the fact the business was barred from operating in three states. The scam pilfered at least $80 million from investors, mainly Latino and Asian immigrants, while the company’s owner “used the looted funds to buy two golf courses, a 7,000-square-foot mansion, a 39.8-carat diamond, and mining rights in Sierra Leone.”

HSBC’s position is fragile, given it has already signed three deferred prosecution agreements (DPAs), an official form of probation, with the U.S. Department of Justice in the past eight years.
But patience is running thin, especially since the bank’s decision, in June, to embrace the Chinese Communist Party’s crackdown on Hong Kong, which prompted U.S. Secretary of State Mike Pompeo to accuse the bank of aiding China’s “political repression” in Hong Kong. 

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Ed 26 days ago
HSBC Loyalists Lose Faith After Stock’s $83 Billion Plunge 
HSBC Holdings Plc’s tumbling stock price is testing the patience of even the bank’s most loyal investors.

Choi Chen Po-sum, a former vice chair of Hong Kong’s exchange who has owned HSBC shares for more than 40 years, now calls her investment a mistake. Simon Yuen, a money manager who has lobbied unsuccessfully for the bank to reinstate its dividend, says the stock’s slump to a 25-year low may have further to go.
Ping An Insurance Group Co., HSBC’s biggest shareholder, has passed on opportunities to express confidence in the bank, saying only that its holding is a “long-term financial investment.”

The responses underscore the depth of investor malaise toward HSBC, which has tumbled faster than every other major financial stock globally over the past six months. Even historically upbeat sell-side analysts have mostly turned bearish on the bank amid growing concerns about loan losses and its ability to navigate mounting tensions between the U.S. and China.

“I’ve lost faith,” said Choi, 89, who’s chair of National Resources Securities Ltd. in Hong Kong, where scores of individual investors have long considered HSBC to be a core holding. “You want the shares to recover? Don’t even think about it.”

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Ed 23 days ago
Rewind to 2012...
HSBC became bank to drug cartels, pays big for lapses
(Reuters) - In February 2008, Mexican authorities told the CEO of HSBC Holdings Plc’s Mexico unit that a local drug lord referred to the bank as the “place to launder money,” U.S. prosecutors said on Tuesday, as they announced a record $1.92 billion settlement with the British bank.
Lax money laundering controls at HSBC allowed two cartels - one each in Mexico and Colombia - to move $881 million in drug proceeds through the bank over the second half of the last decade, according to prosecutors and federal court documents.
So rampant was the practice, prosecutors said, that on some days drug traffickers deposited hundreds of thousands of dollars at HSBC Mexico accounts. To speed things along, the criminals even designed “specially shaped boxes” that fit the size of teller windows at HSBC branches, according to the documents

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