MPs can complain all they like about record bank profits — waiting for the likes of HSBC to follow a moral compass is a fool’s errand.
Europe’s biggest bank has among its worst records of financial malpractice: in 2021 it was ordered to pay over £60 million by the Financial Conduct Authority (FCA) as a penalty for money-laundering failures. But that was small potatoes: its 2012 $1.9 billion (£1.5bn) fine by US regulators for laundering a river of dirty cash from Mexican drug cartels broke records.
In the bank’s defence it was only going back to its roots. Its initials (standing for Hong Kong-Shanghai Banking Corporation) reflect its origins in the globe-spanning British imperialism of the 1860s and the forced opening of the Chinese market to the opium trade through two bloody wars.
Still, “the world’s local bank” likes to assure us it is on our side. Chief executive Noel Quinn warbles happily that the “interest rate environment” is responsible for its “financial performance [continuing] to improve” in one breath, then commiserate with debtors the next that “with more mortgage customers due to roll off fixed-term deals... and further rate rises expected, tougher times are ahead.”
Tougher times that will see its financial performance continue to improve, no doubt.
FCA officials have issued stern warnings to banks for raising the cost of borrowing as interest rates rise, while failing to raise the interest they pay on deposits.
And it takes some nerve for the very banks charging people hundreds more a month for mortgages to discuss this trend as some inexorable phenomenon like the weather: it all adds to the mystification by which economic choices, made by human beings to impoverish other human beings, are passed off as facts of life.
Nonetheless, HSBC is a private bank and it exists to make profits. Responsibility for the “interest rate environment” which is enriching this corporate colossus at ordinary people’s expense lies ultimately with a bank supposedly answering to the public interest: the Bank of England.
It is the Bank of England that raised Britain’s base interest rate for the 13th time in a row in June, and is threatening to do it again tomorrow, supposedly with the aim of curbing inflation.
Yet the Bank is untroubled by super-profits like those of HSBC — or for that matter BP, Shell or a host of other giant firms whose price-gouging is a key driver of the inflationary crisis.
Worse, if we accept its logic — that higher interest rates will reduce demand — and apply it to soaring energy and food prices, we see plainly that the Old Lady of Threadneedle Street’s solution to Britain’s economic crisis is that we should go hungry and, come winter, stay cold.
Bank officials have spoken openly of sparking a recession, again with the idea of reducing inflation. Their rate rises have not affected inflation so far — except possibly to accelerate it, by increasing the cost of mortgages — but they will no doubt be delighted with evidence from the TUC that job losses are now mounting in 11 of 20 main economic sectors, including construction, retail and food manufacture.
The Bank’s calm projection that a million people will see their mortgage rise by more than £500 a month in the next three years underlines its ruthlessness. Given its determination to lower wages, this is a recipe for repossessions and bankruptcies.
The TUC tells the government to stop “hiding behind” the Bank of England and take responsibility for economic growth.
We should be more explicit: policy decisions that spell mass impoverishment while piling up profits for banks like HSBC should not be at the whim of unelected bankers. The decision-makers must be accountable.
That means an end to “independence” for the Bank of England, an anti-democratic trick that removes key economic levers from public control.
