HSBC pledges tax haven cutback at annual meeting
Chairman tells angry shareholders bank will improve compliance, sees great opportunities in increasingly internationalised yuan
HSBC pledged to cut its activities in tax havens and further tighten compliance procedures, under a barrage of complaints about past misdeeds from shareholders at the bank's annual general meeting in London.
The global banking giant also said that it saw great opportunity in trading China's increasingly internationalised yuan, which it believed could be one of the world's top three trading currencies by 2015.
As the European Union toughens its measures against tax evasion and offshore havens, a shareholder asked what the bank would do, as it had subsidiaries in those tax havens.
Chairman Douglas Flint said over the next several years there would be a "significant reduction" of activity in those places. He said the operations would not shut down, as they were legitimate, and such activities were "not immoral or wrong".
When several shareholders criticised HSBC for failing to comply with regulations in its operations in India, France and Germany, Flint said the bank had put more resources into improving its standards globally. He declined to comment on specific regions.
Shareholders used their votes to express their level of satisfaction with the directors. Flint got the lowest number of votes for re-election as a director: 97.92 per cent of the shareholders supported him, down from 98.09 per cent last year. A shareholder at the meeting said Flint should take the greatest responsibility for the money-laundering scandal in the US, since he was finance director at the time. HSBC had to pay a fine of US$1.9 billion to settle the US investigation.
Although shareholders had complained about management's high pay and the wrongdoings that had come to light, 89 per cent voted in support of the remuneration of the directors.
Flint said the remuneration committee had clawed back bonuses in the past two years and would continue to apply the policy where appropriate.
The meeting began with a video on the future global use of the yuan. Flint said the development of the yuan as an international currency would be one of the bank's most exciting long-term opportunities.
The gradual opening of China's financial markets was creating investment opportunities on the mainland, he said, and the process of reform was accelerating.
Chief executive Stuart Gulliver said the shadow banking problem on the mainland was not a big risk, because regulators were aware of the issue and were focusing on it.
HSBC expects the yuan to become fully convertible within five years, taking the mainland's financial integration with global markets to a new level. Flint said the bank was helping businesses and investors seize the opportunities it represents.