It might be unfair that HSBC’s wrongdoings of a decade ago have been dragged into the headlines in the UK once again, and you could argue that there is a retrospective moralism at play from the left-wing publications that are banging on about it. But it is seriously hard to feel sorry for the bank.
It did bad things, and ignorance on the part of those running it is not excuse. As British politician Margaret Hodge - who is, incidentally, part of the family which owns steel trader Stemcor - said, the board were either asleep at the wheel, or complicit. Either way, they are to blame.
But what about the individual clients whose names have been mentioned in connection with murky goings-on at HSBC's Swiss branch? For example British retailer Richard Caring, whose ownership of a string of celebrity hangouts in London, such as the Ivy, have made him a high-profile character, has had it revealed that in 2005 he withdrew SHF5m in cash, “enough to fill a suitcase”, as The Guardian newspaper rather amusingly put it.
It is this sort of thing that sends a chill down the spine of families whose names are well-known, and especially those whose operating businesses bear their names. Tricksy tax-avoidance schemes, gaming the system and regulatory arbitrage all seemed very clever back in 2005, but a decade later they look dodgy to say the least, and probably not the sort of thing you want suppliers and customers to read about.
Family office professionals will tell you that families are still wary of banks because so many of their incomprehensible schemes blew up in 2008, but the HSBC saga, which like a zombie refuses to die, suggests that the reputational and ethical risks of certain investments could even outweigh the financial ones and could reverberate way after any financial losses have been accepted.
A banker once told Family Capital, the best measure of whether an investment is ethical is whether you would feel happy telling your mother about it. That depends on your mother’s rectitude, of course, but it’s not hard to extrapolate the rule to banks' clients.
Would your mum prefer you squirrelled your cash into some convoluted special purpose vehicle whose organisational diagram resembles the blueprint for a nuclear submarine, or sunk it into a business that would create employment for local people?
And if the money got lost, which loss is better? Not all losses are equal, and a loss of reputation is far harder to recoup than a financial one. Risk management has many forms.