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
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Ukrainians now have more freedom of travel - but less freedom of thought

Ukraine's government is rightly concerned about Russian cyber aggression. But does that merit online censorship?

Ukrainians have sacrificed so much in their bid to be recognised as fellow Europeans. Their struggle to extricate themselves from Russian domination is written in the blood of the Euromaidan protestors and the toll of its military dead.

The slow progress of Ukraine’s emergence, into something resembling normality, passed another milestone on 17 May, when President Petro Poroshenko signed an agreement with the EU allowing for visa-free travel in 34 European countries. 

From Sunday 11 June Ukrainians with biometric passports will be able to travel in Europe and stay for 90 days within a 180 period. There are obvious economic benefits to the new agreement. Ukrainians will be free to travel and conduct business with much more efficacy. The new agreement will also reduce the insularity of Ukrainians, many of whom yearn for the cosmopolitanism they see in Western Europe. President Poroshenko was mindful of the symbolism of the agreement. He declared: "Ukraine is returning to the European family. Ukraine says a final farewell to the Soviet and Russian empire."

Perched on the periphery, Ukraine is now set to become more woven into the European mainstream. Ukrainians sense that the western door is slowly but inexorably opening, and that both recognition, and validation beckons. In this respect, it seems that there is much to celebrate.

However, as ever, Ukraine hangs uneasily in the balance between the old ways and the new. On 16 May, Poroshenko signed a decree blocking access to Russian social media websites Yandex, VKontakte and Odnoklassniki. Millions of Ukrainians sign in to these websites every day. Even Poroshenko himself uses them. Five Russian TV stations are already banned in Ukraine. Poroshenko says that "Ukrainians can live without Russian networks". And it is certainly a fact that Ukrainians have responded to the decree by turning away from the Russian platforms in great numbers. Ukrainian Facebook is growing by some 35 percent a day.

In the context of Ukraine’s continuing conflict with Russia, it is perhaps understandable that the government in Kiev wishes to limit Russian trolls, together with Russian state influence and misinformation. This is certainly also the case across the whole western world, which is keenly aware of Russian cyber aggression. Nevertheless, one must ask why countries such as Britain, France and Germany continue to allow their citizens to access Russian media platforms, when Ukraine does not. 

While the new travel freedoms for Ukrainians has unleashed optimism, the latest decree has indicated something a little darker about the future. President Poroshenko would do well to consider the actions of other European governments that he so ardently wishes to emulate. Closing down social networks is usually done by authoritarian regimes like North Korea, China and Saudi Arabia. But Poroshenko advocates democracy, and in democracy there is no place for such acts. It is surely a mark of a nation’s maturity to encourage freedom of thought, as well travel.

Mohammad Zahoor is the publisher of Ukrainian newspaper The Kyiv Post.

 

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