21 April 2015 - A comparison of what the UK’s big four High Street banks reveal about their operations around the world shows that HSBC is currently by far the most secretive, Christian Aid says today.
Barclays emerges as clearly the most transparent of the four while RBS takes second place and Lloyds comes third.
The news comes before HSBC and Barclays’ Annual General Meetings this week.
Christian Aid’s comparison of the big four banks is based on their country-by-country reports – legally required publications about their activities in each country in which they operate. The reports reveal information such as the number of people that each bank employs in a particular country, its turnover and the amount of tax it has paid.
Such data help tax authorities and others to identify suspicious patterns which could reflect tax avoidance or evasion.
Commenting on HSBC’s current report, Joseph Stead, Christian Aid’s Senior Adviser on Economic Justice, said: “In the wake of the revelations about its subsidiary in Switzerland, HSBC said it had already changed. Our findings suggest that the bank’s instincts remain secretive and that it is still failing to reveal important information which gives vital clues about whether it is paying the right amount of tax in the places where it operates.
“Christian Aid cares about this because developing countries lose many billions every year as a result of tax dodging by multinationals. The companies use financial secrecy to help them get away with it. The price is paid by people who live in poverty, who depend on the schools, clinics and all the other public services funded by tax revenues.
“While we are not suggesting that HSBC is doing anything illegal, on the basis of these reports it appears to be the most secretive of the big four High Street banks. It is hiding far too much about its global activities.
“Christian Aid urges it to open up and make itself more accountable to its investors and the people and authorities in the 73 countries and territories where it operates.”
A recent change in European law required major banks to publish country-by-country reports on their turnover and headcount, starting in 2014 - and to file more detailed information with the European Commission. Since the Commission decided (with the support of a report from accountants PWC) that there would be no negative impact from making more information public, from 2015 onwards banks will have to reveal more information, including details of their profits, taxes paid and public subsidies received.
“Last year was an opportunity for UK banks to show their commitment to transparency. They could publish the full report they had to prepare for the European Commission, or put out as little information as legally possible,” added Mr Stead.
“While Barclays’ transparency is not perfect and the bank has been fairly questioned for some of the figures revealed in its country-by-country report, it is doing far better than most other major companies and deserves credit for that. We look forward to seeing a much fuller report from HSBC later this year.”
HSBC’s current country-by-country report does not live up to its name because most of the 74 countries and territories in which it says it operates are not included. Instead it lumps them all together as ‘other’ and says it had turnover of $5 billion in those places.
“HSBC places $5.7bn or some 8.9 per cent of its turnover in the ‘other’ category, compared with just over one per cent for Barclays and RBS and 0.06 per cent for Lloyds,” said Mr Stead. “But $5.7 billion is a huge amount, bigger than the GDP of Sierra Leone, Malawi or Fiji.
“It averages out at turnover of roughly $100m per country which is unreported, making HSBC unaccountable to investors, governments and citizens in these territories.
“HSBC also takes the same approach as Lloyds and includes the UK’s Crown Dependencies of Jersey, Guernsey and the Isle of Man in its figures for the UK, rather than separating them out as both RBS and Barclays do. Again, this further reduces the level of transparency provided by these reports,” warned Mr Stead.
HSBC’s latest annual report does provide details of the taxes it pays in some of the countries in which it operates; however by publishing this separately from its country-by-country report, the bank makes it much more difficult to interpret and use the information. Furthermore, the tax information remains of limited value because it lumps together a variety of taxes rather than separating them out as, for example, Barclays does.
HSBC acknowledged that other banks’ country-by-country reports contained more detailed information than its own but it rejected the suggestion that it has been secretive.
The bank said it had a ‘commitment to openness and transparency in tax reporting’ and that its next country-by-country report will contain more detail as required by European law, including figures for profit before tax; public subsidies (of which there will be none to report), and tax paid on profits.
HSBC said: ‘HSBC strives to maintain the highest standards of disclosure in its reporting, for example the 'Notes on the Financial Statements' in the Annual Report and Accounts go beyond the minimum levels required by accounting standards, statutory and regulatory requirements and listing rules. We continue to enhance our disclosures in line with good practice recommendations issued by relevant regulators and standard setters and in response to feedback from users of our financial statements.’
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Notes to editors:
1. Christian Aid works in some of the world's poorest communities in around 50 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.
2. Christian Aid’s core belief is that the world can and must be changed so that poverty is ended: this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, sustainably. Our strategy document Partnership for Change explains how we set about this task.
3. Christian Aid is a member of the ACT Alliance, a global coalition of more than 130 churches and church-related organisations that work together in humanitarian assistance, advocacy and development. Further details at http://actalliance.org
4. Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire
5. For more information about the work of Christian Aid visit http://www.christianaid.org.uk