As if the traditional high street banks hadn’t been under enough fire recently, now HSBC is joining the growing crowd in the dog house. The bank has been hit with a $1billion fine in the US after failing to enact stringent enough controls on money laundering, allowing for money from illegal sources to be deposited in the bank and then used by them to create their own profits.
HSBC have agreed to cooperate fully with a whole raft of investigations which will expose just how deeply involved they were. What’s most damaging about this is that HSBC were not one of the sixteen banks currently being investigated after details of Libor fixing emerged, but now they have become just as tarred.
There are still other ongoing probes into HSBC’s potentially shady dealings, but it’s already been too much for a lot of customers. A recent survey by Money Supermarket revealed that almost one in five Britons are preparing to move their money elsewhere, saying they had entirely lost faith in the traditional high street banks.
Whether it’s because people are tired of incompetent management or the flood of revelations about immoral, unethical activities, people are taking current accounts, mortgages, loans and more away from the high street chains and moving them to building societies, alternative financial providers like supermarkets, or to ethically managed banks like The Co-Operative.
There are between 60 and 70 million bank accounts open in the UK, so losing a fifth of these would be a significant blow to the retail arm of banks, as well as reducing the amount of capital they have for their investment arms to work with before the government imposed ring-fencing even begins.
The trickle of customers to alternative banks has become a torrent, and news like this will only help to increase the volume of those moving their money.