“Legacy issues” pertaining to, amongst other things, the sale of Lehman Brothers structured notes by HSBC Private Bank (Suisse) SA Hong Kong, have resulted in the unit losing its Type 1 and Type 4 licences in Hong Kong, as well as receiving a hefty fine.
The Securities and Futures Commission Appeals Tribunal issued a 205-page ruling that castigated HSBC for “a broader malaise” in the private bank that left the regulator with no choice but to suspend the key licences and impose a fine.
Specifically, the SFC slapped HSBC Private Bank (Suisse) SA Hong Kong with a penalty of HK$400 million, less than was originally doled out.
The unit has also had its Type 4 licence for advising on securities suspended one year, commencing on 21 November 2017, and its Type 1 licence for dealing in securities suspended for one year, also commencing on 21 November 2017.
However, HSBC’s private banking arm in Hong Kong will not be affected, insofar as the private bank now operates under a different legal structure.
In a statement seen by Asian Private Banker, HSBC said:
“HSBC Private Banking has stringent processes and controls which are in line with the evolving regulatory landscape, and has enhanced its investment advisory model to further align investments to client needs and to deepen clients’ understanding of the nature and risks of the products. We remain focused on serving our clients’ needs.”
HSBC continued: The “suspension of [HSBC Private Bank (Suisse) SA Hong Kong] licences will not affect HSBC Private Banking’s current operations in Hong Kong. PBRS is the legal entity which had engaged in the relevant regulated activity in the period between 2003 and 2008. HSBC’s Private Banking business in Hong Kong no longer operates under this legal entity, and currently operates under The Hongkong and Shanghai Banking Corporation Limited, the principal operating entity of the HSBC Group in Asia Pacific. This legal transfer was completed in 2013 to simplify governance requirements and administrative processes, and to join the same legal entity that houses the other three HSBC global businesses in Asia Pacific.”
Join 10,000+ private bankers and wealth managers
Your company may already have a subscription. Add your work email below to check.