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Embassies hard hit as HSBC dumps clients

LONDON — HSBC bank has told dozens of foreign missions in London that it will close their bank accounts, an official said Sunday, news that has sent diplomats across the capital scrambling to find a new place to put their money.

Bernard Silver, an former honorary consul who serves as president of the Consular Corps of London, said he was told by British officials that more than 40 different embassies, consulates, and high commissions were affected.

''The majority of missions are finding it very difficult for other banks to accept them,'' he said in a phone interview.

Silver declined to name any specific missions, but the Mail on Sunday newspaper said that the Papal Nunciature — the Vatican's mission to London — was affected, as was the Papua New Guinea High Commission, and the honorary consul from Benin.


Attempts to reach the Vatican's mission, Benin's honorary consul, and Papua New Guinea's high commissioner were not immediately successful, but the newspaper cited an official at the latter as expressing shock at the move.

''We've been banking with HSBC for 22 years,'' John Belavu was quoted as saying. ''For them to throw us off in this way was a bombshell.''

HSBC spokesman Will McSheehy said Sunday that the move was part of a wider reassessment of its business started by chief executive Stuart Gulliver in 2011. As of May, the bank's retrenchment strategy has seen 52 peripheral or underperforming units close and a loss of about 40,000 staff.

McSheehy said the changes had translated into a ''significantly diminished appetite for the embassy business,'' although he declined to reveal how many UK missions had their accounts pulled.

Foreign missions traditionally deal in large amounts of cash, something which may have raised uncomfortable questions at a bank that has been buffeted by money laundering scandals. In 2012, HSBC was slapped with a record fine after US officials revealed that its bankers had handled assets of Iran, Libya, and Mexico's murderous drug cartels. HSBC is still struggling to clear its name, including one case involving a former employee who claims to have evidence showing ''scandalous'' levels of tax evasion and money-laundering at the company.


McSheehy said that compliance issues were just one of many factors — such as profitability or efficiency — which the bank had assessed.

''There's no one single reason,'' he said.

Britain's Foreign Office declined to confirm the number of missions involved, saying only that it had sent an unspecified number of diplomats advice on finding a new UK bank.

A spokeswoman said there was little more for the British government to do.