The chairman of HSBC has cautioned that the apprehension of robust fines was constraining banks to end up risk averse in the midst of unprecedented regulatory changes after the recent financial crisis.
As Britain's greatest bank disclosed that it was setting aside $367m (£218m) to blanket compensation for slip-ups concerning loan statements to its UK clients, Douglas Flint said there was a "observable and growing danger of disproportionate risk aversion".
Flint remarked that as the ban, which makes two-thirds of its profits in Asia, reported a 12% fall in first-half profits to $12.3bn on a year back and gave out warnings about the ligitation and administrative fines it could confront on matters extending from the breakdown of the Madoff empire to the altering of costs in currencies and gold and silver.
Flint delineated a list of administrative changes that the bank was confronting, including the execution of a ringfence between its retail and casino investment segments, requested by UK regulators from 2019.
"I do not think we have ever had to ask so much of so many," said Flint. "We face growing fatigue within critical functions as well as increased market competition for trained staff from other financial institutions facing similar resource challenges. This is adding to cost pressures both from increased salaries as market rates increase, and from investment in training and systems support to improve productivity.
"The demands now being placed on the human capital of the firm and on our operational and systems capabilities are unprecedented."
Flint added that staffs needed to work weekends to roll out improvements to its systems. "One of the most obvious statements - is that there are only 52 weekends in a year."
In 2012, the bank was fined £1.2bn by the US dominant voices for rupturing US sanctions and permitting Mexican drug lords to launder cash through the monetary framework. A week ago it confronted feedback for shutting the records of three Muslim associations, including the Finsbury Park mosque, which in the late 1990s and early 2000s got to be synonymous with the radical pastor Abu Hamza.
"Greater focus on conduct and financial crime risks at all levels of the firm globally is clearly the right response to past shortcomings. There is, however, an observable and growing danger of disproportionate risk aversion creeping into decision-making in our businesses as individuals, facing uncertainty as to what may be criticised with hindsight and perceiving a zero-tolerance of error, seek to protect themselves and the firm from future censure," Flint said.
"Unwarranted risk aversion threatens to restrict access to the formal financial system to many who could benefit from it and risks unwinding parts of the ecosystem of networks and relationships that support global trade and investment," he said.
Lower UK customer redress programme charges of $234m thought about of $412m in the first a large portion of 2013 yet $194m of this identified with a crisp charge to repay customers missold payment protection insurance. The bill for paying remuneration to customers sold this protection nearby advances now best £24bn which happens to be the biggest till date.
The latest $367m charge for neglecting to agree to the Consumer Credit Act makes HSBC the most recent bank to fall foul of its regulation. In November 2013, the Office of Fair Trading sent out letters to more than 50 banks and building societies about wrong records sent to customers who, for HSBC's situation, were not told every year that they could make fractional reimbursements of loans they took.