Shares in HSBC dropped to their lowest level in more than 25 years after the bank was named in media reports alleging international lenders had flagged trillions of dollars in transfers to US anti-money laundering authorities.
HSBC’s Hong Kong-traded shares fell 5.3 per cent on Monday to close at HK$29.30, their lowest since May 1995, following the weekend publication of the reports by the International Consortium of Investigative Journalists and other media organisations including BuzzFeed.
Shares in Standard Chartered, another bank named in the reports, fell 6.2 per cent in Hong Kong on Monday.
The ICIJ allegations were based largely on leaked documents covering more than 2,100 suspicious transactions worth more than $2tn and flagged by lenders and other financial groups to the US Department of Treasury’s Financial Crimes Enforcement Network between 1999 and 2017.
Banks and other financial services companies must file suspicious activity reports to authorities if they detect transactions that could indicate money laundering or other suspicious activity. They are not necessarily proof of wrongdoing.
UK banks HSBC and StanChart were among the five lenders that appeared most frequently in the Treasury documents, according to the ICIJ. StanChart disclosed more than $166bn in suspicious activity reports while HSBC disclosed almost $4.5bn, according to figures from the ICIJ.
HSBC declined to comment on its suspicious activity reporting but said in a statement to the Financial Times that “all the information provided by the ICIJ is historical” and predated the conclusion of the bank’s deferred prosecution agreement with the US Department of Justice in 2017.
That deal expired in December 2017, closing the book on a money laundering scandal in Mexico that forced the bank to overhaul its compliance system after HSBC in 2012 paid what was at the time a record $1.9bn settlement.
StanChart said in a statement on Monday that “there will always be attempts to launder money and evade sanctions . . . we take our responsibility to fight financial crime extremely seriously and have invested substantially in our compliance programmes”.
HSBC’s Hong Kong-listed shares have fallen more than 50 per cent this year as the coronavirus pandemic and tensions between Beijing and Washington hit its operations.
The Global Times, a state-run Chinese tabloid, said on Saturday that HSBC was a candidate for inclusion in Beijing’s first “unreliable entities” list, which would target foreign companies deemed to have hurt Chinese interests.
HSBC declined to comment on the Global Times report.
The ICIJ reports could add to other troubles faced by HSBC and StanChart, including chronically low interest rates and the cancellation of dividend payments.
“Both companies are sensitive to any negative news,” said Louis Tse, managing director of Hong Kong-based VC Asset Management. “Retail investors in particular want to cut their losses. They don’t know what is next — is there more negative news coming or not?”
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