Many of us will have seen HSBC’s advert in the papers this weekend which gave their version of the current problems surrounding their Swiss private bank in the past. I am a former employee of HSBC and it is sad to see an organisation that in so many parts had such high standards and values dragged down in this way. Within the information in the advert was the staggering statement that the group now employeed 7,000 people in compliance. 7,000 people solely employed to make sure the other people are doing things right (or doing the right things?). Now I know that people in compliance would argue they have a positive role to play but 7,000!
I read around the subject a little, and here is a statement from HSBC that shows what they see as the underlying cause….
“Prior to the acquisition in 1999 of Republic National Bank of New York and Safra Republic Holdings SA, a US private bank, HSBC had a small private banking activity focused mainly on Group clients. The Swiss private bank was largely acquired through this transaction. The Republic/Safra business focused on a very different client base and had a significantly different culture to HSBC. The business acquired was not fully integrated into HSBC, allowing different cultures and standards to persist.”
Telling isn’t it. (If you want to learn your HSBC history, have a read around their acquisition of Household in the US … a similar story of cultural clash that cost them even more than this one).
Sometimes culture, values, behaviours come across as woolly, soft, ill-defined. It can be hard to explain how beneficial they are when they are embedded and a natural part of a firm. But when we see governance failures (banking, NHS, politicians) they are often pointed to as cultural failures. Within the senior and high ranking layers of organisations the culture and values demonstrated and acted upon have been proven again and again to be critical to the success (or failure avoidance) of an organisation. All organisations should attend to this. They should talk about it. They should be open about it. And they should hold each other accountable. And finally, they should be supportive of each other – particularly when short term pressures place executives under strain to break the values.
On acquiring Republic National Bank of New York and Safra, HSBC would have been well advised to spend a lot of time and money on culture, values and behaviours (or perhaps audited them before the acquisition). Whatever the cost of that work it would have been better than billion dollar fines, 7,000 compliance officers and global reputational damage.
Those of us who work in this line should not be pompous or pious but we could perhaps be bolder in our beliefs that values, behaviours, and conversations matter.
Brendan
www.bowlandsolutions.com
