Not unlike ambitious number twos before him—indeed, not unlike his immediate predecessor—HSBC CFO Ewen Stevenson figured this put him in an advantageous position. He is highly regarded and wanted a promotion, and he didn’t care that his boss, CEO Noel Quinn, wasn’t quite willing to make way just yet. And not unlike ambitious number twos before him, Stevenson found that he didn’t have quite as much leverage as he thought, and so, quite unlike the other ambitious number two to whom we’ve been referring throughout, Stevenson won’t become CEO eventually.

Ewen Stevenson, 56 years old, in recent months told board members he wanted to be HSBC’s CEO and didn’t want to wait too long, the people familiar with the matter said. The board was unwilling to provide timing for a change or an assurance that Mr. Stevenson would get the job, the people said….

Mr. Stevenson, well liked by investors and analysts, is leaving at a tumultuous time for the bank…. His exit is the latest sign of executive upheaval at the banking giant. HSBC has cycled through senior staff since Chairman Mark Tucker started in 2017. Mr. Tucker named a new CEO, John Flint, in 2018, leading to the departure of the last CFO, who also had wanted the CEO job.

HSBC CFO Ewen Stevenson Sought Top Job Before Surprise Resignation [WSJ]
HSBC Posts Profit Decline, Names Georges Elhedery as Finance Chief [WSJ]

As few as three workers have formed a party branch at HSBC Qianhai Securities, a Shenzhen-based investment bank owned by HSBC, people familiar with the matter said…. Such Communist Party units are common at private companies in China, HSBC said….

Party branches have been operating at the local subsidiaries of foreign banks including Citigroup Inc., Standard Chartered PLC and HSBC’s main banking business in China, since as early as 2008, according to state media reports.

Of course, Wells, has branches in Hong Kong, Beijing and Shanghai, as well, so we imagine this rare bit of good fortune is not likely to last, assuming it has gotten even this far.

Staff at HSBC’s China Securities Arm Set Up Communist Unit [WSJ]

HSBC committees that review all external-published research and client communications have amended multiple reports to soften the language used on the subject, including changing the word “war” to “conflict”, according to two people with direct knowledge of the matter.

The changes in language had triggered internal debate and strong complaints from some staff, they added. It contrasts with explicit references to Russia’s “war” in research from rival banks such as UBS, Goldman Sachs and Deutsche Bank.

The “S,” though? That can definitely stand for “shame.” Not that Noel Quinn can feel it.

HSBC removes references to Ukraine ‘war’ from analyst reports [FT]
Wall Street Is Scrambling For the Exits in Moscow — and Billions Are at Stake [Bloomberg via Yahoo!]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

From Monday, they will use blockchain technology to reconcile and pay out on deals in dollars, sterling, euro and Canadian dollars between the two banks, using HSBC’s FX Everywhere platform. The agreement means they will bypass CLS, the nearly two-decades-old utility that central banks urge market participants to use to neutralise the risk of certain trade failures…. The two banks also said they hoped to expand the system to other banks and emerging market currencies that CLS does not settle….

By using the technology, both HSBC and Wells will have real-time transparency of the settlement status of foreign exchange trades in the four initial currencies…. Wells will pay HSBC a small fee for using the platform, but the costs are likely to be lower than using CLS.

It also seems an appropriate juncture for a timely reminder of the less legitimate aspects of said technology.

Cryptocurrency exchange AscendEX suffered a hack for an estimated $77 million following a breach of one its hot wallets…. The Singapore-based exchange, which was formerly known as BitMax, claims to serve one million institutional and retail clients. It recently raised a $50 million Series B led by Polychain Capital and Hack VC.

Binance Asia Services, the exchange’s Singapore unit, said on Monday that it would drop its application for a licence to run a crypto business in the country and would wind down its Singapore crypto exchange by February.

The withdrawal comes after the Monetary Authority of Singapore (MAS) in September ordered Binance Singapore to stop all crypto transfers with the global exchange binance.com, which the regulator placed on an investor alert list and said “may be in breach” of local law.

For those keeping count, that’s at least three large economies not-so-politely escorting the world’s largest crypto exchange to their borders.

HSBC and Wells Fargo to settle currency trades with blockchain [FT]
Crypto Exchange AscendEX Hacked, Losses Estimated at $77M [Coindesk via Yahoo!]
Binance abandons plans for Singapore crypto platform [FT]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

On the one hand, there’s the “it’s not fair” argument propounded by the white-collar bar, here represented by Gibson Dunn litigation chief Joseph Warin.

“These are big organizations and try as you might to get it right, there’s gonna be misconduct. That’s what’s troubling us,” he said. “One of our clients has three million employees…that’s bigger than every city but eight or nine in the United States.”

Actually, Joe, it’s bigger than all but two cities in the United States, and that sounds an awful lot like the “few bad apples” theory that didn’t work out so well for John Stumpf. And to which Justice’s David Last’s riposte is, “guess they didn’t teach anthropology at Creighton in the early 1970s.”

“Look, if there are so many instances to count, that may be another conversation that we need to have,” Mr. Last added. “If you’re in the 50s, or the hundreds of prior touches, that’s something we probably need to know.”

Speaking of which!

EU antitrust regulators on Thursday fined Barclays, Credit Suisse, HSBC and NatWest 344 million euros ($390 million) for foreign exchange market rigging, closing a key chapter in a high-profile investigation…. Some of the world's biggest banks have been fined more than $11 billion collectively by U.S. and European regulators since allegations first surfaced around 2013 that dealers were rigging the world's largest financial market….

"Today we complete our sixth cartel investigation in the financial sector since 2013 and conclude the third leg of our investigation into the foreign exchange spot trading market," EU antitrust chief Margrethe Vestager said in a statement.

All totally unconnected and having nothing to do with any of those banks’ culture, or indeed banking culture more generally, right, Joe? Anyway, while we’re talking about things that Warin’s bank clients aren’t going to like, let’s have a little look-see at what Rohit Chopra’s been up to over at the Consumer Financial Protection Bureau.

The bureau did not identify any banks it may be targeting, but Mr. Chopra said it had asked its examiners to focus on banks that rely heavily on overdraft fees. Banks with “a higher share of frequent overdrafters or a higher average fee burden for overdrafting” should also expect close supervisory attention, he said.

Mr. Chopra said the bureau would take action against banks that violated rules governing overdraft fees and would “seek to uncover the individuals who directed any illegal conduct.”

Justice Department Officials Dig In on Corporate Repeat Offenders [WSJ]
EU fines HSBC, Credit Suisse, others over 'Sterling Lads' forex cartel [Reuters]
The C.F.P.B. says it will scrutinize banks that rely heavily on overdraft charges. [DealBook]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

“Whoever writes the biggest check is the winner,” Jason Kennedy, chief executive officer of U.K.-based recruiting firm Kennedy Group, said in an interview. “There is no loyalty left.”

Too true, Jason: From star athletes to fast-food employees, money talks, and whoever’s willing to part with the most of it for your talents and time is likely to win them. Under any circumstances, in the year 2021, plaintive, nostalgic sighs for the good old days when proletarians knew their place and stayed there until they received their walking papers would be hilariously quaint and naïve if uttered unironically. In this case, it’s even more so, because Kennedy is talking about bank credit traders.

Hedge funds fresh off their best performance in years are aggressively hiring, recruiters say. Banks including Barclays Plc, Goldman Sachs Group Inc. and HSBC Holdings Plc have suffered senior defections to the buy side in recent weeks. Barclays has tried promotions and pay promises to stem defections…. While spring moving season is nothing new on Wall Street trading desks, observers say star performers in the world of corporate credit are in particularly high demand.

I mean, seriously: Who could imagine leaving such archetypes of appreciation and loyalty as Barclays, Goldman or HSBC, places that have definitely not artificially held down bonuses for appearances’ sake or canned colleagues for convenience’s sake, sometimes in the middle of a pandemic, or made it abundantly clear how little you are valued no matter how large a portion of the bottom line you’re responsible for? Sick, sad world if you ask me or, presumably, Jason Kennedy, a man whose job it is to facilitate the movement of people from one company to another, usually for more money.

Credit Traders Flock to Hedge Funds as Banks Keep Lid on Pay [Bloomberg]

Bonuses at HSBC’s investment bank and trading division were down 15% for 2020, according to the company’s annual report. This was in line with those in asset management and private banking, and less severe than in other parts of the bank where cuts topped 20%.... More junior staff were generally less affected by the cut, HSBC said, with those lower down in the bank receiving bonuses more in line with their performance than senior employees.

Of course, many of their announced bonuses may prove theoretical, because HSBC still has 24,000 layoffs to implement, and if that call comes before the check, well, the check’s not going to come.

Among those set to lose out on their bonus are staff facing redundancy in some jurisdictions. Under its pay policy, employees are no longer eligible for a share of the bank’s bonus pool once they have been informed they are being cut even if they are still employed by the company on or beyond the date when the payments are made.

This all has a very perverse potential impact on HSBC’s key revenue generator, such as it is: On the one hand, you’ve told your very best employees that they’ll have to take their talents elsewhere if they wish to be appropriately compensated, while on the other making clear to the rest of them that they might not want to work too hard, since there’s a one-in-seven chance they won’t be rewarded for it anyway.

It's easy to see why you might feel a bit disincentivized as a result. - The bank still has 24,000 of its 35,000 job cuts still to go. Why work hard all year for the prospect of a reduced bonus irrespective of performance, or no bonus at all if the bank decides to chop you the day before it hits your bank account?

HSBC Bosses Try to Quell Banker Anger Over Cuts to Bonuses [Bloomberg]
Morning Coffee: HSBC’s horrible bonuses have come back to haunt it. Hedge fund manager’s long-suffering wife [eFinancial Careers]

“We do not make freezing decisions based on political affiliation or activity,” Quinn said in his opening remarks. “It’s because we are obliged to, under request of police authorities, as they undertake their investigations.”

Quinn emphasised that the London-based bank had only been in dialogue with local police and no other Chinese authorities, and that HSBC would be committing a criminal offence if it did not follow the order, which could put the institution and its customers at risk….

“I am not in Hong Kong purely because of the profit,” Quinn said. “It’s not a matter for me whether I choose China over the UK or China over another political system. My motive is 100 per cent about helping people in Hong Kong recover from the challenges they face, and I have to work within the legal framework I’m given in Hong Kong.”

And beyond the profits and the helping the people in Hong Kong that he’s allowed to help, there’s also the benefit of not getting the uncomfortable questions directed at Quinn’s peers who’ve decided that chewing gum in public is not as important as not waiting around to see what happens next in the now significantly less Special Administrative Region.

Government agencies including the Securities and Futures Commission of Hong Kong, the Hong Kong Monetary Authority, the Hong Kong Financial Services and the Treasury Bureau and the Financial Services Development Council have phoned banking and asset management executives who have relocated to rival cities including Singapore and Tokyo, according to three people with direct knowledge of the calls.

The calls, which hedge fund managers described as new and unusual, asked for a full picture of the decision-making process behind the moves and the significance of the timing…. Fund managers said that while it was not uncommon for the SFC to contact funds leaving Hong Kong to ask about a change in licensing status, the calls from the other agencies and the tone of the questioning were unusual.

HSBC boss defends move to freeze accounts of fugitive ex-lawmaker Ted Hui, tells British MPs bank is committed to Hong Kong [South China Morning Post]
Hong Kong grills finance executives on reasons for leaving [FT]

'If you do visit us, please wear a face covering and maintain a safe distance from others. If individuals put themselves or our colleagues at risk, without a medical exemption, we reserve the right to withdraw their account.'

Oh, wait, just kidding: This is happening at HSBC branches in a marginally more civilized country whose government hasn’t completely broken down yet.

HSBC has threatened to shut down the bank accounts of customers who refuse to wear a face mask in its UK branches.

Mouth-breathing yahoos, please feel free to continue to put Jackie Uhi’s U.S. colleagues at all the risk you’d like, as is your god-given right as an American idiot.

HSBC threatens to shut down bank accounts of customers who refuse to wear a face mask in its UK branches [Daily Mail]

The Financial Crimes Enforcement Network, or FinCEN, is the agency within the Treasury Department charged with combating money laundering, terrorist financing, and other financial crimes. It collects millions of these suspicious activity reports, known as SARs…. What it does not do is force the banks to shut the money laundering down….

For more than a year, BuzzFeed News and its partner news organizations across the world mined the information on these tens of thousands of pages to map more than 200,000 transactions…. Western banks could have blocked almost any of them, but in most cases they kept the money moving and kept collecting their fees.

OK, so that’s not exactly what we were expecting or hoping for back when FinCEN piously warned against the unlawful disclosure of SARs to journalists, but there’s some fun stuff all the same.

Experts say, some banks treat SARs as a kind of get-out-of-jail-free card, filing alerts about a huge array of transactions without actually moving to halt them. In some cases, banks filed numerous reports on the same clients, detailing their suspected crimes over the course of years while continuing to welcome their business.

By December 2013, JPMorgan Chase had filed at least eight SARs on accounts and companies controlled by [Paul] Manafort, flagging more than $10 million, according to a FinCEN research report. Manafort, who went on to become Trump’s campaign chair, was convicted of bank and tax fraud in 2018….

When investigators for HSBC’s American operations asked their colleagues in Hong Kong for the name of the person who owned Trade Leader, a company that had moved more than half a billion dollars through the bank in less than two years, the answer they got was “None available.” The company would reportedly emerge as an important hub in the so-called Russian Laundromat, a sprawling scheme in which wealthy Russians, facilitated by banks, secretly moved their money into the West….

In 2012, HSBC faced a historic crisis. After permitting narcotraffickers to launder money and conducting business in off-limits countries such as Sudan and Myanmar, the bank was fined $1.9 billion. It promised to change its ways, and to hold it to that promise, the government installed an independent monitor to keep close watch. But the FinCEN Files investigation shows HSBC continued banking, and profiting from, the same kinds of customers that got it in trouble in the first place, such as a Panamanian import-export firm that the Treasury Department later said was laundering money for drug kingpins.

And there is so, so very much more where all that came from, which we invite you to enjoy at your leisure as we have. Not enjoying it? Well, HSBC, for one, and Swedbank, for another, albeit in a not-directly-related, adjacent sort of way.

Chinese state media over the weekend warned the British lender could face restrictions on its business in China, adding to a squeeze on the stock after reports said HSBC and other banks overlooked instances of money laundering… Investors are concerned HSBC could be put on an “unreliable entities” list in China that would threaten the bank’s growth plans in retail banking and in the country’s securities markets. Over the weekend, China’s Ministry of Commerce said such entities could face limits on investment and staff in China. It hasn’t designated any businesses in this way yet, but China’s state-owned Global Times tabloid said many media reports had named HSBC as a candidate….

On Monday, the bank’s Hong Kong-listed stock closed down 5.3% at 29.30 Hong Kong dollars, the equivalent of $3.78 and the lowest since May 1995. HSBC’s U.K.-listed shares also fell sharply, amid a broad selloff in European bank stocks.

[Swedbank] said the investigation covers the period between Sep. 20, 2018, through Feb. 20, 2019, and relates to the disclosure of insider information and the obligation to establish an insider list in connection with the disclosure of suspected money laundering within the company.

Meanwhile, the Treasury Department—FinCEN’s parent organization—figured that now would be a great time to finish four years of work on a rule to close one key anti-money laundering loophole, extending the customer identification and beneficial ownership requirements so effective above to some federally-unregulated financial institutions. And also to maybe ensure that there are far fewer SARs to leak going forward.

The latest announcement, an advance notice of proposed rule making published last week in the Federal Register, seeks public comment on the requirement that financial institutions must maintain an “effective and reasonably designed” anti-money-laundering program…. Under federal AML regulations, banks and other financial institutions are required to detect and report suspicious activity to the government. That obligation, coupled with elevated enforcement of anti-money-laundering laws over the past decade, has driven institutions to file massive amounts of low-value reports, experts say….

The proposed rule making is part of a larger effort to modernize the U.S.’s AML regime, according to FinCEN. The agency has suggested making clarifications about the requirements of the U.S.’s primary AML legislation, the Bank Secrecy Act, that would empower banks to allocate their resources more effectively.

Dirty Money Pours Into The World’s Most Powerful Banks. [BuzzFeed]
FinCEN Files [BuzzFeed]
Treasury Plugs Gap in Anti-Money-Laundering Regulations [WSJ]
HSBC Stock Hits 25-Year Low [WSJ]
Swedbank Under Investigation By Swedish Regulator in New Probe [WSJ]

HSBC was already walking a very fine line, forced by business necessities and amorality to side with China over its decision to tear up its 1997 treaty with the U.K. and any pretense to human rights in one of its namesake cities, a move condemned by and ratcheting up tensions with the U.S. It also probably couldn’t have foreseen the current unpleasantness when, back in 2016, the Justice Department asked for some information about a little Chinese telecommunications giant and then-HSBC client, Huawei. Not that it could have done very much even if it had, since thanks to a 2012 money laundering settlement, the DoJ pretty well had HSBC over a barrel.

Anyway, this cooperation with U.S. authorities four years ago is all of a sudden big news in China, with government mouthpiece the People’s Daily accusing HSBC—which, again, derives most of its revenue from China—of “setting a trap” for Huawei in conjunction with the DoJ, which trap led Huawei to allegedly violate U.S. sanctions and eventually to another of the issues exacerbating U.S.-China tensions, the arrest and proposed extradition of Huawei CFO Meng Wanzhou.

The U.S. has sought to ban Huawei from its own and other countries’ telecommunications networks and is seeking the extradition from Canada of Ms. Meng for allegedly misleading banks about ties between Huawei and an affiliated company in Iran. The banks, which included HSBC, cleared hundreds of millions of dollars in transactions that potentially violated international sanctions, the U.S. alleges.

Things are especially dire for HSBC in that it can’t simply retreat to its nominal home base, London, given that the U.K. has rather forcefully thrown in its lot on matters Hong Kong and Huawei with the Trump Administration.

So what is a giant multinational bank with especially deep ties to China supposed to do in such a situation? Why, scramble to have it both ways.

In the statement, first released on Chinese social media and geared toward a local audience, HSBC said it wasn’t involved in the DOJ’s decision to investigate Huawei or to arrest Huawei finance chief Meng Wanzhou and doesn’t have any hostility to the company. It said it relies on communities understanding that international banks must follow international rules, and that they should consider “the values and contributions of their services provided to international customers and local markets….”

Huawei lawyers alleged this year in Canada that the DOJ’s grip on the bank gave HSBC a motive to present Huawei as the mastermind of its sanctions violations. HSBC denies that…. In its statement Saturday, HSBC said it is “rooted in China” and a “supporter of its economic and social development.”

HSBC Defends Cooperation With U.S. Prosecutors, Denies Setting Trap For Huawei [WSJ]

Bankers at Credit Suisse Group AG, HSBC Holdings Plc, Julius Baer Gruppe AG and UBS Group AG, among others, are broadening scrutiny under their programs that screen clients for political and government ties and subjecting them to additional diligence requirements, these people said.

The designation, called politically exposed persons, can make it more difficult or altogether prevent people from accessing banking services, depending on what the bank finds about the person’s source of wealth or financial transactions.

So, how are you supposed to avoid falling afoul of Hong Kong’s “security law”? Why, whole new levels of due diligence.

The checks at some wealth managers have involved combing through comments made by clients and their associates in public and in media, and social media posts in the recent past, these people said…. One banker at a global wealth manager that holds more than $200 billion in assets said the audit of its clients could go back as far as 2014 in some cases to gauge a client’s political stance since Hong Kong’s 2014 pro-democracy “umbrella” movement.

Of course, with banking’s perfect amoral clarity, there’s something almost as bad as being in favor of democracy in Asia’s leading financial center, and that’s being opposed to democracy there.

The sources, who requested anonymity because of the sensitivity of the situation, said the broadened scrutiny of clients also applied to Hong Kong and Chinese officials who had implemented the law in anticipation of any U.S. sanctions against them.

In any event, Jack Ma doesn’t care, and really, why should he?

Billionaire Jack Ma’s Ant Group is seeking a valuation north of $200 billion as it goes public in Hong Kong and Shanghai, people familiar with the matter said, kicking off a much-anticipated market debut for China’s leader in internet finance…. If conditions are favorable, it could seek to raise more in its IPOs than Saudi Aramco’s record $29 billion haul, one of the people said, asking not to be identified talking about a private deal.

Global banks scrutinize their Hong Kong clients for pro-democracy ties [Reuters]
Jack Ma’s Ant Seeks $200 Billion Value in Landmark Dual IPO [Bloomberg]

Bridgewater Associates and former co-Chief Executive Officer Eileen Murray are still negotiating an exit package three months after she left the world’s biggest hedge fund -- a fight that has dragged on because Bridgewater’s offer is both less than what has been paid to men who left the firm and below the status of her position, one of Murray’s advisers said…. Her adviser, who asked not to be named because of the sensitivity of the situation, said this was the third time since 2017 that Bridgewater offered her compensation that was lower than male colleagues at comparable levels.

Why, it’s not like Bridgewater to handle delicate matters of sex badly! Still, Murray seems a particularly silly employee to play this particular kind of hardball with, given that she was, you know, co-CEO of the company.

Murray was a highly rated employee and, given her job, would have had knowledge of others’ compensation, the adviser said. Her expectations for the exit package are based on customary terms and objective criteria available to Bridgewater.

But, Bridgewater might counter in a highly passive-aggressive way, Eileen lies….

“The story is loaded with inaccuracies,” Bridgewater said in a statement. “We are not sure where these incorrect allegations came from but they should be attributed to specific sources.”

On the other hand, so does Bridgewater.

Bridgewater Spars With Ex-CEO in Gender Discrimination Dispute [Bloomberg]

The FINRA Board of Governors has unanimously elected Eileen Murray, former Co-CEO of Bridgewater Associates, LP, as Chairperson effective at FINRA’s Annual Meeting in August…. “I am honored by the opportunity to lead the FINRA Board at such an important time for FINRA, the financial services industry and the markets,” said Murray. “Under Bill’s leadership, FINRA has worked tirelessly to ensure that markets operated under the highest standards of integrity for investors and I look forward to building on that effort.”

Now, these standards of integrity may not be what FINRA staffers or its members are used to, to say nothing of the other culture shifts that may be coming.

“The word ‘pain’ has this pejorative negativity associated with it,” Murray said. “What it is, is putting yourself in a position to really look at yourself and become self-aware.”

Well, flashes of self-awareness at FINRA have certainly been painful over the years. And the self-regulator isn’t the only troubled organization looking to have Murray’s keen eye examine its many, many problems.

The former co-chief executive of the world’s biggest hedge fund and newly elected chairwoman of Finra, the US securities industry’s self-regulatory arm, is joining HSBC’s board as an independent director effective Wednesday, the bank said…. “I am absolutely delighted to welcome Eileen,” Mark Tucker, the HSBC chairman, said in a statement. “Her wealth of experience across banking and finance, together with her extensive knowledge of financial technologies and corporate strategy, will bring an invaluable perspective to the board.”

Just wait until the probing sessions begin, Mark.

Eileen Murray Elected Chairperson of FINRA Board of Governors [press release]
Eileen Murray Is Named to Lead Finra, Wall Street’s Self-Regulatory Arm [WSJ]
HSBC adds former co-CEO of world’s biggest hedge fund Bridgewater Associates to board [South China Morning Post]

Now that the economy has begun to creakily reopen regardless of the global public health threat, HSBC has enough cover to send out several thousand invitations to a Zoom firing.

“Since February we have pressed forward with some aspects of our transformation program, but we now need to look to the long term and move ahead with others, including reducing our costs,” Chief Executive Officer Noel Quinn said in a memo published Wednesday…. Unite, a workers’ union representing some of the bank’s U.K. staff, said the news would cause “great apprehension” among employees. “The question that must be asked today is ‘Why now, HSBC?’” said Dominic Hook, national officer at the union.

HSBC Resuscitates Plan to Cut 35,000 Jobs to Boost Growth [Bloomberg]

The U.S. solicitor general on Friday urged the U.S. Supreme Court to pave the way for continued litigation against these foreign institutions, some of the last remaining targets in the global hunt for stolen cash from Mr. Madoff’s $20 billion fraud….

Mr. Picard has long insisted that under U.S. bankruptcy law, he can recoup Ponzi scheme proceeds that were distributed from offshore funds in the British Virgin Islands, Cayman Islands and Bermuda…. Banks including HSBC Holdings PLC, Crédit Agricole SA and Société Générale SA have said that transfers occurring entirely outside the U.S. were beyond the trustee’s reach.

Trump Administration Backs Madoff Trustee’s Hunt for $3 Billion Loot [WSJ]

HSBC Holdings PLC appointed Noel Quinn as its permanent chief executive, seven months after he assumed the leadership position on an interim basis…. He was the only internal candidate, and other bankers considered for the role included UniCredit SpA boss Jean Pierre Mustier, who withdrew from talks about the position in late February.

HSBC Appoints Noel Quinn as Permanent CEO [WSJ]

And, truth be told, they’re almost certainly not. But they’re bad enough to require twice as many layoffs as those at Deutsche, and Sankey’s job is looking a lot less global.

HSBC Holdings PLC said it would cut 35,000 jobs and $100 billion in assets in the next three years as it scales back operations in the U.S. and mainland Europe, as well as its investment bank…. Chief Financial Officer Ewen Stevenson told journalists there would be “meaningful job cuts” in HSBC’s investment bank and headquarters in London.

Well, that’s unfortunate. The good news is that HSBC is going to double down on its fast-growing business in Asia….

HSBC has reduced its expectations for Asian economic growth in 2020 as a result of the coronavirus outbreak, Chairman Mark Tucker said. The bank said loan losses could rise and revenue could fall if the outbreak is prolonged.

Luckily on that front, Ray Dalio has fished a few coins out of the contemplation pond at Bridgewater HQ, and Ken Griffin from his couch, to make sure that doesn’t happen.

Billionaire Ray Dalio’s family charity and his hedge fund Bridgewater Associates LP are donating $10 million to help support China’s coronavirus relief efforts…. Citadel founder Ken Griffin’s hedge fund and securities firm have put up $7.5 million to help contain the deadly virus.

HSBC to Cut 35,000 Jobs and $100 Billion of Assets [WSJ]
Bridgewater, Dalio Donate $10 Million For China Virus Fight [Bloomberg]

Saudi Aramco, the world’s biggest oil company, ended trading on Monday with a market value of over $2 trillion, a worth that had eluded it when it took its shares public…. In four trading days, strong demand, mostly from Saudi retail and corporate investors, pushed the shares above the prince’s goal.

Turns out that patriotism and/or FOMO and/or fear of something else are powerful market forces inadequately compensated for by the best and brightest Wall Street has to offer. On a possibly related note, some guy points out that those banks don’t have much to show for their efforts aside from a lot of wasted time and a bilingual tongue lashing.

JPMorgan, Goldman Sachs, Citigroup, Credit Suisse, Bank of America and Morgan Stanley are getting paid roughly $3 million apiece for their roles in the deal, according to banking sources…. In the end, MBS used two domestic investments banks and HSBC to list Aramco stock on his own Tadawul exchange, marketing the shares almost exclusively to Saudi Arabians and citizens of neighboring Gulf states. That final decision obviated the work done by JPMorgan and the five American banks.

Saudi Arabia Insisted Aramco Was Worth $2 Trillion. Now It Is. [NYT]
US bankers reap a pittance from Aramco $64 billion IPO [Thornton/NYP]

The British bank confirmed that Samir Assaf, its longtime global banking and markets chief executive, will leave his job in March and become chairman of corporate and institutional banking…. Other changes include the departure of a 14-year veteran, Marc Moses, who is leaving the bank’s board and his job as chief risk officer next month, to be replaced by Pam Kaur, head of wholesale market and credit risk. The bank said Chief Operating Office Andy Maguire will give up his role as of January, having helped HSBC find his replacement, former Hewlett Packard executive John Hinshaw.

Their replacements will be working on a new plan for HSBC that will ensure their predecessors are to be joined by many, many others in seeking new employment.

In Mr. Quinn’s brief tenure, the bank has accelerated plans to sell its French retail bank and is shedding thousands of jobs to lower costs.

HSBC is readying for a fresh phase of restructuring that will likely see it exit more countries and businesses.

HSBC Cuts More Top Executives in Strategy Shift [WSJ]

That means for every Jamie Dimon who lasts a fistful of decades, there are a couple of Tim Sloans who only hang on for like 2.5 years or so. But those latter dudes are statistically anomalous losers because you should at least hit the four-year mark. Anything less is really embarrassing...

John Flint’s tenure running HSBC Holdings Plc has come to an abrupt end, with the bank announcing early Monday in Asia that the chief executive officer was stepping down.

The board believed a change was needed to help the bank, which has seen its Hong Kong-listed shares fall about 15% in the past year, meet the challenges it faces in an increasingly complex environment, Chairman Mark Tucker said in a statement. 

Umm, John Flint is not a name with which we are particularly familiar. What do we know about him again? He was like a boring lifer who was supposed to get things in order, right? What else can we remember?...

Flint will be replaced on an interim basis by Noel Quinn, head of global commercial banking. The lender, which also released its latest quarterly results several hours earlier than scheduled, didn’t give a reason for the decision. Flint, 51, joined HSBC in 1989 and took over as CEO in February 2018.

He's only been in charge for 18 months? Ouch.

Some HSBC executives in Asia expressed surprise at the move, saying there had been no indication that a change was afoot. They asked not to be identified as they aren’t authorized to comment on the issue.

Well, yeah, it's pretty surprising that they took Flint out this quickly. Were there any clues at all?

Oh, so "Shocking" is a bit strong.

What's next for good old HSBC?

The CEO hiring process would take six-to-12 months, and consider both internal and external candidates, [Tucker] said.

Good luck with this, right, Wells Fargo?

HSBC CEO Flint Exits in Surprise Move After Just 18 Months [Bloomberg]

Big fish, right? And what bigger fish might be gobbling them up?

Citi and HSBC.

Yes, we can explain:

Two of Deutsche Bank AG’s top New York deal makers are poised to leave the embattled lender ahead of impending deep cuts to its Wall Street investment bank, according to people familiar with the matter.

The veteran bankers, Mark Hantho and John Eydenberg, are in advanced negotiations to join Citigroup Inc., the people said. They would be the most prominent departures from the German lender’s U.S. investment-banking operations this year.

Apparently being a big deal at Deutsche these days lowers your poachability hotness rating to "Citi" levels of attractiveness. But this nightmare is even darker for the traders:

In London this week, senior equities banker Edward Sankey quit after almost 15 years at Deutsche Bank to take over as global head of equity capital markets at HSBC Holdings PLC., according to people close to the bank.

Yeah, it's bad out there. If things get any worse at Deutsche Bank, what's left of senior banking staff will find themselves begging for jobs at...[shiver]...Barclays or, Gott bewahre!, UBS.

Deutsche Bank’s Mark Hantho and John Eydenberg Poised to Leave [WSJ]

Are you American? Bank with HSBC? You might want to be a little less than 1% worried right now, because that’s how many of you are unwittingly and unwillingly sharing some pretty important info with hackers.

The lender said that the perpetrators may have accessed information including account numbers and balances, statement and transaction histories and payee details, as well as users' names, addresses and dates of birth.

Enjoy your year of credit monitoring and identity theft protection service or, I guess, next identity theft protection service. And rest assured that HSBC is very sorry and takes its “responsibility for protecting our customers very seriously.” Or at least seriously enough that this was still possible. But, you know, regrets and all. Especially if you're also a Wells Fargo customer, for how those clowns will wind up misusing your misfortune.

HSBC bank confirms US data breach [BBC]

Back in August, a group of self-proclaimed and self-unidentified senior investment bankers told HSBC’s board that it had a lot of problems with co-head of global banking Robin Phillips, and now, they were gonna hear about it. Boy, did they: Phillips, who in addition to being co-head of global banking is also the interim other co-head since his former partner quit a year ago, is an “embarrassment” and “persistent failure,” the board was told. “We are entirely fed up and demoralized, and have no confidence at all in the existing leadership,” the bankers wrote, “whistleblowing on incompetence.”

“Robin Phillips and the existing management team should be immediately shown the door and their bonuses should be clawed back because they have been paid under totally false pretences,” they demanded.

Well, they’re not getting that. But they are getting someone to co-disappoint them alongside Phillips.

HSBC Holdings PLC has hired former East West Bancorp Inc. President Gregory Guyett as co-head of global banking….

Mr. Guyett, who couldn’t immediately be reached for comment, is a 30-year veteran of JPMorgan Chase & Co., where his roles included heading investment banking in Asia-Pacific and serving as chief executive for Greater China, according to his East West biography…. Between JPMorgan and East West, Mr. Guyett was executive vice president of corporate development at industrial group Johnson Controls International PLC.

HSBC Appoints Former JPMorgan Banker as Co-Head of Global Banking [WSJ]
Mutiny at HSBC: Investment bank attacked in anonymous letter [FN]

This is at best quite annoying and at worst potentially quite ruinous, the latter because, well: a lot of money! Luckily for all those loveable rate-rigging global financial institutions, it’s turning out to be the former, if an eight-figure settlement even qualifies as annoying these days.

Citigroup Inc, Deutsche Bank AG and HSBC Holdings Plc have agreed to pay a combined $132 million to settle a U.S. class action brought by futures traders accusing them of manipulating the Libor benchmark interest rate, according to a U.S. court filing on Wednesday….

The money would go to proposed classes consisting of anyone who traded in Eurodollar futures on exchanges, including but not limited to the Chicago Mercantile Exchange, between Jan. 1, 2003 and May 31, 2011, according to the filing.

Deutsche Bank will pay most of that $132 million, because obviously. Less clear is whether they even hear about such things in Frankfurt anymore, or if any Libor-related settlements under $200 million are essentially automated at this point, or just handled by some guy in the New York mailroom.

Citi, Deutsche Bank, HSBC Agree to Pay $132 Million to Settle Libor Claims [Reuters via NYT]

HSBC has a new chief executive officer. He’s a lot like the old CEO, but younger.

Now the head of retail banking and wealth management, Mr. Flint is quintessentially HSBC. After joining its international leadership program out of college, he learned the ropes in bank branches, trading rooms and at the bank’s treasury department, in cities including Hong Kong, London, New York and Bangkok. The assignments often had him working alongside Mr. Gulliver, and he was the outgoing CEO’s chief of staff for a year before taking his current role in 2013…. He is expected to continue on much the same track as Mr. Gulliver with respect to the bank’s strategy.

This makes sense, because as Stu Gulliver put it two-and-a-half years ago, no one is better suited to the job of HSBC CEO than Stu Gulliver. So if Stu Gulliver can’t be HSBC CEO anymore on account of his retiring, then someone as much like Stu Gulliver as possible should do the job. Someone with secret Panamanian bank accounts. Someone who thinks people should really get off his and his colleagues’ asses about all of the illegal shit they’re doing—they are trying, damnit, but are only human. Someone who can effortlessly oversee some currency funny-stuff and front-running and money-laundering and off-color role-playing with aplomb. And since that guy’s retiring, at least someone with a tremendously British name like “John Flint.”

HSBC Names Insider John Flint as CEO [Bloomberg]
Quintessential HSBC Insider Takes the Helm [WSJ]

Theresa May is fond of the phrase “Brexit means Brexit.” This week, it became clear that “Brexit” also means “hard Brexit” and “no single market” and “no financial services passport.” And because of those meanings, it also means that St. Pancras station is soon to be filling with British bankers bound for Paris and Frankfurt, and that, in a neat reversal of the sort of grumbling about Polish plumbers heard in certain Brexit-fancying corners—in other words, not The City—Poles will soon be whining about all of these British bankers driving up their rent. HSBC is sending French Rosetta Stone tapes to 1,000 London-based employees, and UBS is preparing to send a similar number across the Channel. Some 4,000 JPMorgan Chase employees may join them, while Goldman mulls shipping 3,000 jobs to Frankfurt, Warsaw, France, Spain and New York, which both Lloyd Blankfein and London Mayor Sadiq Khan say may be the biggest winner in the Brexit migration.

Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said New York is “already a bit of a gainer” from Brexit as the Wall Street firm slows its previous policy of moving operations to London….

“I don’t know if there will be one one or ‘ones’ that we will go to,” Blankfein said of potential destination cities, noting that the bank used to be spread out across the region, running large operations in cities like Paris, Frankfurt and Milan. “It wasn’t the most efficient way to run our business. It wasn’t the safest way to run our business. It’s better to have people in a concentrated place where you can watch them. Technology is more expensive if people are distributed.”

Khan said he was telling European partners in Davos that "so-called hard Brexit may not benefit London or the UK because firms will leave London, but there's no guarantee they're going to go to Paris, Madrid, Frankfurt or Berlin".

"The reality is they'll probably go to Hong Kong, Singapore or New York. So a so-called hard Brexit could be a lose-lose, a lose for London and the UK, and a lose for the EU too," he said.

Wherever they’re going, they’re going.

"Most banks will make decisions on where to shift business by the end Q1, with initial headcounts of '100 to a few 100' to be moved," said one of the sources familiar with bank relocation plans, speaking on condition of anonymity….

"If you are a foreign institution hubbing into Europe from London, you really have no choice other than to think very quickly and carefully how to replicate the access to Europe ... If you have already established operations in Europe, you can take your time"….

The five largest U.S. banks, on the other hand, will need to apply for many new licenses and, in some cases, establish brand new entities in the EU right away.

Currently they employ around 40,000 people in London, more than in the rest of Europe combined, and rely on the EU "passporting" regime that allows them to offer services across the bloc out of their British hubs.

It’s all the talk at Davos. And that talk is of the “not if, but when and how many” variety.

Mr Orcel said that with Brexit “we have to anticipate the worst” adding that the bank can’t afford to be optimistic….

He said: “It will very much depend on the agreement the UK will reach with the EU, but yes we will have to move bankers.”

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said on Wednesday that “it looks like there will be more job movement than we hoped for….”

“We simply have to accommodate the laws of the land both in Britain and the EU,” Dimon, who had previously estimated 4,000 of 16,000 JPMorgan jobs may need to leave the U.K., told Bloomberg Television on Wednesday. “That will determine how many jobs and how many people and how many things you have to move.”

Needless to say, Theresa May is there, too, promising the world’s economic chieftans that everything is going to be alright, while also deploying her trademark charm to remind them that the whole mess is really their fault in the first place.

Mrs May said she had had a "very good positive discussion with banks about the benefits of the City of London, about what it is that has brought them to the City of London and how we can continue to build on that for the future"….

The prime minister also warned that inequality blamed on globalisation was aiding the "politics of division"….

She argued for reforms so the global economy created wealth for all, rather than a "privileged few", and "centre-ground mainstream politics" could "work for everyone".

Unfortunately, Davos Man wasn’t listening. He had to take a call from his real-estate broker in Zürich.

Banks put ‘hard’ Brexit move plans into action [Reuters]
Goodbye Passport, Hello Equivalence? Brexit Banks Lower Sights [Bloomberg]
Brexit: HSBC may move 20% of its London banking operations to Paris, chief executive Stuart Gulliver says [The Independent]
Brexit: UBS’s chief Andrea Orcel says the bank ‘will definitely’ have to move jobs from London [The Independent]
Goldman May Cut London Staff by 50% on Brexit, Handelsblatt Says [Bloomberg]
Wall Street Meets May in Davos as Banks Plan Own Brexit [Bloomberg]
Goldman Sachs’s Blankfein Says New York Is a Brexit ‘Gainer’ [Bloomberg]
London Mayor Sadiq Khan warns Asia, NY will win out from Brexit [Economic Times]
May’s ‘positive discussion’ with banks [BBC]

In the good old days of banking (i.e. prior to 2008), junior employees worked obscene hours for obscene pay and senior bankers worked 10% of those hours for even more obscene amounts of money. The latter did so by holding boozy lunches that lasted the better half of the afternoon; calling week-long ski trips in Verbier when they ran into clients at the bar once "working"; and generally holding the belief "my presence* is my value." In the last few years, though, things have changed. Management expects people to show up to the office and actually, quantifiably, justify their presence. Senior bankers are asked, "What do you do here?"

It's a scary, strange time. And nowhere is it more terrifying than at HSBC:

Matthew Westerman, the former Goldman Sachs banker who took over as head of HSBC’s global banking division in May is reportedly compelling his bankers to use a system that tracks exactly how they use their time, exactly how many clients they visit, and exactly how many deals they bring in. Seemingly gone are the days when you could mooch into the office at 11am before leaving for a ‘client lunch’ and reappearing at 4pm for two hours. HSBC bankers are said to be unhappy as a result. One New York-based MD in M&A says HSBC’s system sounds “Orwellian,” and that most banks are more gentle in the way they keep tabs on client-facing staff. “Management have access to my diary, but I’m not aware of any systematic checking,” he says.

Banks start to wonder whether MDs in M&A are really doing any work [eFinancial via Matt Levine]

*Not specifically at the office, just like, on earth.

Remember in 2012, when the U.S. Department of Justice was like "So, HSBC, it looks like you've been palling around with drug cartels, Iran, and other types of characters, we should probably punish you for that" and HSBC was like "Aww man, do you have to?" and the DOJ was like "Yeah, kinda," and HSBC was like "It'd be a lot cooler if you didn't" and the DOJ was like, "You know what? You seem like a nice guy, so how about instead of prosecuting you just sign an agreement promising not to get into anymore trouble and we'll call it a day?" and HSBC was like, "Sounds great!" and the DOJ was like "But, really, you can't get into anymore trouble, you gotta take that part seriously" and HSBC was like "No problem!" Well a couple of guys on the forex desk didn't get that particular memo and now this is happening.

U.S. prosecutors are considering a criminal charge against a unit of HSBC Holdings Plc related to conduct on its foreign-exchange desk, according to two people familiar with the matter, imperiling an earlier deal that let the bank avoid prosecution. The Justice Department has already charged two people who were on the bank’s foreign-exchange desk with improper trading and is asking whether the bank’s internal review of that trading this year should have resulted in disciplinary action, the people said. Prosecutors’ fresh investigation of HSBC brings them closer to a step that has often been threatened but rarely taken -- tearing up a deferred-prosecution agreement if a company fails to walk the road of reform laid out by the Justice Department. HSBC is essentially on probation: It admitted in 2012 that it helped Mexican drug cartels launder money and did business with Iran and other sanctioned nations. To avoid charges, it signed the so-called DPA, which required it to improve its internal controls and submit to an outside monitor.
If the Justice Department determines that the bank broke U.S. law after it entered into the agreement, it could invoke a section of the deal that says HSBC could be held responsible for the conduct it admitted to in 2012. Such a cascade of events could lead to a conviction in the laundering and sanctions case, threatening the bank’s ability to move beyond its legal troubles.

Maybe the DOJ will take pity on the bank and move to a Second Chances or Three Strikes model?

U.S. Considers HSBC Charge That Could Upend 2012 Settlement [Bloomberg]

Back in July, HSBC executive Mark Johnson experienced a not great travel delay, when federal agents showed up to JFK and arrested him. The way Johnson sees it, though, the surprise collaring was a huge waste of everyone's time because he totally did not "participate in a fraudulent scheme to front-run a $3.5 billion currency transaction by one of the bank's clients," as has been alleged. So he pleaded not guilty today and here's the detailed analysis re: that not guilty plea from this lawyer:

"He pleaded not guilty because he is not guilty," the lawyer, Frank Wohl, told reporters after the hearing. "He's done nothing wrong."

No further questions.

HSBC executive pleads not guilty in U.S. over forex scheme [Reuters]

Last year, HSBC’s global head of sanctions—a real job at a bank that’s had to deal with this and this and this and this—made the world a promise: There would be more wrongdoing to come. And there has (again), a fact which you might have noticed if you were flying out of JFK late Tuesday night. If prosecutors’ allegations are true, there’s no doubt that a couple of HSBC foreign exchange executives did a little front-running, because manipulating currency markets was not enough for the bank. And there’s no question that front-running is explicitly frowned upon by FINRA, and is not the kind of thing one wants to advertise to customers. But is it illegal? Luckily enough for Mark Johnson and Stuart Scott, probably not.

Fraud requires some form of deception, and not just taking advantage of clients, even if it costs them money. Cairn Energy may have thought HSBC would put its interest first, but the bank was not obligated to so, although the trading certainly does not help build trust with future clients….

An interesting issue is whether any of the statements described in the complaint add up to a fraud, or were intended to ease the mind of a client that decided to go ahead with the currency conversion despite the uptick. There were no misstatements about the price of the pound, and Cairn Energy was paying close attention to the upward movement in the currency market. It could have pulled the plug on the deal at almost any time, but chose to go ahead.

Finding the Fraud in the HSBC Currency Trading Case [DealBook]

The first rule of the "I scratch your back/you scratch mine" club is you don't talk about the "I scratch your back/you scratch mine" club in an electronic forum that anybody can and will read. Come on people!

Rob Domanko, the senior banker at HSBC who embarrassed his bank and a client when he was caught openly chatting about a quid-pro-quo transaction, quietly left on the bank on Wednesday, The Post has learned. Last year, The Post obtained transcripts of an Instant Bloomberg chatroom in which Domanko lays out in detail how the sausage is often made on trading desks throughout Wall Street. Domanko, who headed the bank’s equity derivatives program since May 2012, advised his traders to sweeten a deal for a client — but not too much — because HSBC was already likely to win its business...After one banker asks why they should give the client a better deal, Domanko gives them the unvarnished truth. “to look competitive …maybe he gives it to us if we are close but not the best price..jenn spent 2months helping the clients son get an internship,” he wrote. “chance he gives to us if close, but not best offer,” he went on. “so, even a few bps would help,” he said, referring to the basis points. The blunt answer was met with immediate derision and scorn by his underlings. “Amazing,” one wrote. “are you kidding me on that helping the clients son get an internship?” wrote another. “How can you write that in an IB chat?” asked a third. “the internship wasn’t at hsbc,” Domanko replied. “she mentored him…”

Chatty, bonehead banker exits HSBC [NYP]

Ways it could've gone worse: flying out of LaGuardia. So, y'know, a little perspective.

Federal agents surprised an HSBC Holdings Plc executive as he prepared to fly out of New York’s Kennedy airport late Tuesday, arresting him for an alleged front-running scheme involving a $3.5 billion currency transaction, according to three people familiar with the matter. Mark Johnson, HSBC’s global head of foreign exchange cash trading in London, was held in a Brooklyn jail overnight and will appear in court Wednesday, one of the people said, asking not to be identified because the details of his arrest aren’t public.

U.S. Charges HSBC Official in FX Rigging Probe [Bloomberg]

Case in point: Justice Department says we’re going to prosecute you for all of the banking you did—probably badly—for the Iranians and the Mexican drug cartels, etc. But if we don’t prosecute you, we’re going to fine you a bunch of money and maybe prosecute some of your staff. HSBC countered with, “How about you don’t prosecute us or any of our staff?” And Justice said, “Deal.”

Quoting from internal Treasury records, the report said that once the Justice Department decided not to prosecute HSBC, its officials began softening the deal offered to the bank. One change involved releasing the bank’s employees, officers and directors from potential prosecution.

The original agreement provided no protection from prosecution for employees who “knowingly and willfully” processed financial transactions with countries under American sanctions, the report said.

But the final deferred prosecution agreement gave a conditional release from liability for transactions disclosed to investigators during the period covered by the settlement.

Further case in point: HSBC is apparently stilldoing all sorts of things covered by the deferred prosecution agreement (although it is doing them less), and promising to do them again in the future, and still doesn’t get prosecuted. Is this (and Switzerland) a great country, or what?

A Bank Too Big to Jail [NYT]