Giancarlo Gatti’s blog reminded me of the well-publicized struggles of HSBC within the media.
The article he referenced presented a strong analysis of HSBC’s issues with organizational culture.
To me, HSBC is a textbook example of prioritizing profits at the expense of responsibility. In order to keep cash flowing, HSBC failed to conduct due diligence and allowed billions of dollars of cartel money to become legitimized.
Moving forward, however, something must be done. The United States’ mandated restructuring plan was a strong start, however, it doesn’t necessarily tackle the root of the problem. If individual agents see opportunities to conduct themselves in an unethical manner and are rewarded for it, it distorts the incentive model of the bank, and threatens to destroy culture. Not only do banks need to ensure that they have ethical people in their teams, they also need to ensure that these individuals can never be tempted to exploit these opportunities. Ultimately, I believe that the government has to provide banks with a helpful nudge in the right direction – through stricter oversight, and heavier fines, the government can eliminate opportunity, while banks rework their corporate culture to eliminate the incentive.
Sources Used
http://www.scmp.com/business/article/1553555/hsbc-seems-find-it-easier-pay-fines-fix-corporate-culture
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