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HSBC branded UK’s most secretive bank

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
22/04/2015

HSBC has been branded the UK’s most secretive bank in a report published today by Christian Aid.

The report, which compares the levels of transparency exhibited by the UK’s biggest banks, concludes that HSBC is by far the most secretive of the major financial institutions examined – and that HSBC is “hiding far too much about its global activities.”

The report emphasises that no impropriety or illegality is implied on HSBC’s part by the findings, but does state that the bank’s lack of transparency raises questions about whether it is meeting its proper tax obligations in different jurisdictions.

The Christian Aid report scrutinised country-by-country reports published by Barclays, HSBC, Lloyds and RBS, recording how many people are employed, how much profit is made and how much tax is paid in each of the jurisdictions the bank operates worldwide. However, the report states that HSBC’s country-by-country report “does not live up to its name”, as specific information relating to many of the 73 countries in which the bank operates is not included in standalone form; many territories are lumped together under the title of ‘other’. £3.8bn (8.9 per cent) of the bank’s annual turnover is placed in this category; Barclays and RBS place 1 per cent of annual revenues in this grouping, Lloyds 0.06 per cent. This means that an average of £67m is generated every year in every country that is not reported. Christian Aid says this makes the bank “unaccountable.”

A recent change in pan-European law means major banks are obliged to publish detailed country-by-country reports on turnover and headcount, starting this year. Banks also have to reveal more information, including details of their profits, taxes paid and public subsidies received, to the European Commission.

“This April was an opportunity for UK banks to show their commitment to transparency. They could publish the full report prepared for the European Commission for wider public consumption, or put out as little information as legally possible,” said Joseph Stead of Christian Aid.

“Our findings suggest that the bank is secretive, and still failing to reveal important information which gives vital clues about whether it is paying the right amount of tax in the places where it operates.”

“Christian Aid cares about this because developing countries lose many billions every year as a result of tax dodging by multinationals,” Stead explains. “The companies use financial secrecy to help them get away with it. The price is paid by people who live in poverty, who depend on the schools, clinics and all the other public services funded by tax revenues.”

Responding to the findings, a spokesperson for HSBC acknowledged that other banks’ country-by-country reports contained more detailed information than its own, but rejected the suggestion that HSBC has been secretive. “HSBC are committed to openness and transparency in tax reporting – the bank’s next country-by-country report will contain more detail, including figures for profit before tax, and tax paid.”

“HSBC strives to maintain the highest standards of disclosure in its reporting. We continue to enhance our disclosures in line with recommendations issued by relevant regulators and standard setters.”

On Friday, the bank will convene its annual meeting with shareholders – the first since being rocked by claims that its Swiss private banking wing aided wealthy clients to evade tax.


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