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Banking scandal could kill British economic last hope - the financial sector

Tuesday, 17 July 2012
Britain became one of the industrialised countries that could not produce tangible goods even though many evolutionary creations started from here. They shifted to the financial and banking sector. The question that was not asked before is if the British banking sector which looked promising will not be damaged by scandals.

The growing scandals that has marred British banking organizations, Barclays and HSBC with high-level potentially destructive scandals Could spell trouble for the city of London. It could start crumbling as a result eroding the last foundation of the British economy along with it?

It all started with the last financial crisis, which many British banks almost went under indicating that most of them indulged in dangerous trading. Then those banks that showed that they were dying were bailed out by the government - that is, RBS, and Lloyds TBS, but it turned out that Barclays and HSBC were resistant to the stresses then at the market. It would suggest that they are properly being managed, as it was thought then that British banks were properly managed.

Recent revelations about the Libor lead by Barclays and now the accusuation that HSBC has let dirty money being washed through its system in the USA are some examples, which show that the British financial sector could seeing ins foundation shaken.

According to news every where today, a US report has found that lax controls at HSBC, Europe's largest bank, meant Mexican drug cartels were able to launder billions of dollars for seven years.

According to Sky news, the investigation by the US  Senate also says US regulator knew HSBC Holdings PLC had a poor system to detect problems but failed to take action.

The report by the Senate Permanent Subcommittee also found that some bank affiliates skirted US government bans on financial transactions with Iran and other countries.

And HSBC's US division provided money and banking services to some banks in Saudi Arabia and Bangladesh believed to have helped fund al Qaeda and other terrorist groups.
This called for the resignation of HSBC's head of compliance, David Bagley at the hearing.
The president and chief executive of HSBC Bank USA, Irene Dorner, apologised to the committee for the behaviour which she said deeply regretted.

Ms Dorner apologised "for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public".

Reports hold that many of HSBC's breaches of US anti-money laundering relate to its use of bearer share accounts. Under the rules for these accounts, ownership of shares and the income they incur can be passed from person to person in secrecy.

At time when the UK economy is counting on the city of London's international financial power to re - ignite the other sectors of the economy, with he banks shooting themselves on the foot, it is worrying to know if there would be time for this sector to sustain the growth and rebalance of the UK economy before it falls. Or whether the US wants to take the London city's position back over there.
by Team

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