Too big to assail?

HSBC suffers a third dose of reputational risk

HSBC already has its hands full managing reputational risk. The UK bank has been struggling to dispel charges that it engaged in money laundering and helped clients avoid paying taxes. Add to that having to allay concerns it bullied the capitalistic institution of a free press.

Peter Oborne, formerly an influential chief political commentator of Britain's Daily Telegraph, this week claimed that HSBC's commercial heft had caused the newspaper to tone down its coverage of the bank's misdeeds. The outspoken Oborne alleged that the proprietors of the newspaper and panicked Telegraph Media Group executives put pressure on editors to pull their punches after HSBC suspended advertising at the start of 2013.
 
Oborne did not produce evidence suggesting HSBC intervened directly to influence the editorial process. The bank declined to comment. The Telegraph says it has a clear distinction between journalists and commercial staff, and called Oborne's attack full of "inaccuracy and innuendo".

Still, the impression that HSBC might have exerted undue sway over the media could prove hard to shake. This week it withdrew advertising in Britain's Guardian newspaper, citing commercial reasons, after stories detailing its role in helping clients evade taxes via Swiss banks accounts began to multiply.

But this isn't the first time HSBC has had to answer questions about its free-speech bona fides. Former Hong Kong senior official Anson Chan told the New York Times that she was less than convinced that HSBC and Standard Chartered had pulled advertising from local papers in 2013 simply for commercial and marketing reasons, as each asserted. The implication was that the banks, irked at what they saw as unfavourable coverage, had extracted economic vengeance.

Big banks benefit hugely from their clout with the media. HSBC itself used four UK Sunday newspapers on February 15 to distribute its tax-evasion mea culpa to a wide audience. So it can quickly become awkward if clients, customers and investors believe that a specific institution can avoid an adequate level of press scrutiny by simply threatening not to take out its wallet.

That would further damage HSBC's image problem. The bank should thrive when free-market economies flourish. Right now, a sequence of unfortunate events has depicted HSBC as more grit than grease in the capitalist machine. It has some work to do to put that right.