Why investors don't care about the HSBC money laundering scandal

Not a massive deal.

HSBC are going to be fined up to $1bn for poor anti-money laundering controls in Mexico, which made it a conduit for "drug kingpins and rogue nations", according to a US Senate committee. Finding that a bank has lax checks on money laundering is nothing new - it happened recently at Coutts, but this time the revelation  “almost puts Barclays in the shade”, writes Nils Pratley at the Guardian.

Well, hardly.

Since the HSBC scandal emerged last week (in an internal memo), shares in HSBC have only dropped 3 per cent – compare this to the 17 per cent fall in Barclays shares since the fine was announced.

Although HSBC’s fine is certain to outweigh Barclays’, the markets have remained fairly unbothered for a few reasons.

First, HSBC’s misdeeds are somewhat overshadowed by the Libor scandal, and second, as detailed in the 340-page US Senate report, the news comes amid that of similar failures  by other banks.

“The senate chose to release HSBC [‘s fine] as a case study - Lloyds and Barclays have also been prosecuted and fined”, says Sandy Chen at Cenkos. He says that Lloyds was fined back in 2009, and Barclays in 2010, but the figures haven’t yet been released.

HSBC investors will also be reassured by the fact that the current HSBC chief Stuart Gulliver was not involved in the Mexican fiasco, where as Bob Diamond was very much at the scene of the Barclays Libor fixings.

Lastly, HSBC can put the problem to bed by simply paying the fine and complying with regulators, an option Barclays doesn’t have. Here’s Sandy Chen in a note:

“Because HSBC has cooperated with the US Senate investigation, and because it has begun to implement the recommended changes, we think that US legislators and regulators will be inclined to give HSBC some breathing space.”

HSBC. Photograph, Getty Images
Photo: Getty Images
Show Hide image

What do Labour's lost voters make of the Labour leadership candidates?

What does Newsnight's focus group make of the Labour leadership candidates?

Tonight on Newsnight, an IpsosMori focus group of former Labour voters talks about the four Labour leadership candidates. What did they make of the four candidates?

On Andy Burnham:

“He’s the old guard, with Yvette Cooper”

“It’s the same message they were trying to portray right up to the election”​

“I thought that he acknowledged the fact that they didn’t say sorry during the time of the election, and how can you expect people to vote for you when you’re not actually acknowledging that you were part of the problem”​

“Strongish leader, and at least he’s acknowledging and saying let’s move on from here as opposed to wishy washy”

“I was surprised how long he’d been in politics if he was talking about Tony Blair years – he doesn’t look old enough”

On Jeremy Corbyn:

"“He’s the older guy with the grey hair who’s got all the policies straight out of the sixties and is a bit of a hippy as well is what he comes across as” 

“I agree with most of what he said, I must admit, but I don’t think as a country we can afford his principles”

“He was just going to be the opposite of Conservatives, but there might be policies on the Conservative side that, y’know, might be good policies”

“I’ve heard in the paper he’s the favourite to win the Labour leadership. Well, if that was him, then I won’t be voting for Labour, put it that way”

“I think he’s a very good politician but he’s unelectable as a Prime Minister”

On Yvette Cooper

“She sounds quite positive doesn’t she – for families and their everyday issues”

“Bedroom tax, working tax credits, mainly mum things as well”

“We had Margaret Thatcher obviously years ago, and then I’ve always thought about it being a man, I wanted a man, thinking they were stronger…  she was very strong and decisive as well”

“She was very clear – more so than the other guy [Burnham]”

“I think she’s trying to play down her economics background to sort of distance herself from her husband… I think she’s dumbing herself down”

On Liz Kendall

“None of it came from the heart”

“She just sounds like someone’s told her to say something, it’s not coming from the heart, she needs passion”

“Rather than saying what she’s going to do, she’s attacking”

“She reminded me of a headteacher when she was standing there, and she was quite boring. She just didn’t seem to have any sort of personality, and you can’t imagine her being a leader of a party”

“With Liz Kendall and Andy Burnham there’s a lot of rhetoric but there doesn’t seem to be a lot of direction behind what they’re saying. There seems to be a lot of words but no action.”

And, finally, a piece of advice for all four candidates, should they win the leadership election:

“Get down on your hands and knees and start praying”

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.