Arab Today, arab today hsbc scandal erupts as british banks face shakeup
Last Updated : GMT 20:51:15
Arab Today, arab today
Arab Today, arab today

HSBC scandal erupts as British banks face shake-up

Arab Today, arab today

Arab Today, arab today HSBC scandal erupts as British banks face shake-up

London - AFP

A scandal erupting at Europe\'s biggest bank HSBC has added to concerns over the state of Britain\'s financial sector amid the Barclays rate-rigging affair and as the industry faces a major shake-up. HSBC last week apologised and its head of compliance David Bagley resigned after US lawmakers accused the London-based bank of failing to apply anti-laundering rules, benefiting Iran, terrorists and drug dealers. The HSBC affair follows hot on the heels of the Libor interest rate rigging scandal that has brought down top executives at Britain\'s Barclays bank -- most notably its chief executive Bob Diamond and chairman Marcus Agius. Regulators are reportedly investigating HSBC, as well as Credit Agricole, Deutsche Bank and Societe Generale, over alleged manipulation of the Libor rate after Barclays was recently fined £290 million over the affair. Britain\'s financial regulator the Financial Services Authority (FSA) has said its Libor probe is looking at seven groups, which are not only British institutions. Bank of England governor Mervyn King has meanwhile proposed that central bank governors and regulators discuss Libor reform at their upcoming meeting in Basel, Switzerland, on September 9. Barclays has admitted attempting to manipulate the Libor and Euribor rates between 2005 and 2009. Libor (London Interbank Offered Rate) is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent. The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money. Investec analyst Ian Gordon believes that the Libor affair will have a far greater impact on the global banking landscape than the HSBC affair. \"Libor will, I think, be seen to be a sector-wide issue and with us for many years to come,\" Gordon told AFP. \"The only good thing I can say about HSBC/money laundering etc is that it will be seen as a legacy issue, hence the fine -- when it comes -- will be a one-off rather than the prelude to civil litigation risk.\" Also last week, Britain\'s state-rescued Lloyds Banking Group (LBG) agreed to sell 632 branches at a loss to The Co-operative Group after a European Union competition ruling. LBG, which is 40-percent owned by the British government, was ordered by the EU to offload a sizeable chunk of its branches in exchange for a huge state bailout following the 2008 financial crisis. The Co-operative Group\'s purchase is the latest step in the reshaping of Britain\'s banking sector, as the government seeks to separate retail bank activities from investment divisions. The Independent Commission on Banking last year ruled that British lenders should split their operations to avoid a repeat of the global financial crisis, blamed in part on highly speculative trading practices. At the height of the financial crisis, Britain was forced to nationalise lender Northern Rock and also pump billions of taxpayers\' cash into LBG and Royal Bank of Scotland. A US Senate report has meanwhile found that HSBC had allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls. Lawmakers said money laundered through HSBC-linked accounts benefited Mexican drug lords and terrorist networks, and skirted US sanctions on Iran. Analysts warned that the problems erupting at major British banks could further rock Britain\'s recession-hit economy. \"The biggest concern following the recent problems is whether declining consumer and market confidence will weigh heavily on what is a crucial sector for UK economic growth,\" said Currencies Direct senior analyst Phil McHugh. \"If so, long run UK economic activity will be further subdued with the prospect of additional and continual stimulus from the Bank Of England being required to sustain the economy. \"Equally, the UK\'s AAA credit rating will be jeopardised by a shrinking financial sector,\" he added.

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Arab Today, arab today hsbc scandal erupts as british banks face shakeup Arab Today, arab today hsbc scandal erupts as british banks face shakeup

 



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