Is Europe’s biggest bank too big to manage? Or have its management and board simply not been up to the job? Politicians and pundits are pressing the issue. HSBC’s senior executives are ducking the question. Yes, they acknowledge, mistakes were made, controls were lax, practices were inappropriate and the organisation’s structure was flawed. But it was not their fault and they are working hard to put things right.
Whether it was their fault or not depends on whether they were responsible for the areas concerned and what one means by responsible. Start with the facts. Douglas Flint, the present chairman, was appointed group finance director and board member in 1995. He appeared qualified for the role. According to the bank’s website: “Mr Flint specialised in banking, financial reporting, treasury and securities operations, group reorganisations and litigation support while at KPMG.”
Yet it was during his tenure that HSBC made the Mexican and Swiss acquisitions that have proved so costly. The first was[OR ‘WERE’?] at the centre of 10 years of money laundering; the second has spawned a series of scandals. And let us not forget the 2003 purchase of Household Finance — the US-based subprime powerhouse and source of significant write-offs. True, the board as a whole makes the final decision to acquire. It would be an odd board indeed that made such acquisitions without the specific blessing of its finance director.