Both the Chairman and CEO of the banking behemoth HSBC have recently appeared before the Treasury Committee of the UK Parliament in connection with the Swiss Tax Scandal . The bank’s Board had previously issued an apology for the scandal to its shareholders and the public in general .
The argument made by the HSBC Board is basically “We didn’t know, how could we? We are a huge organization. It would not happen today”.
Ignorance is bliss.
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The 2008 HBOS Rights Issue
In April 2008, HBOS was on life support when, in a last throw of the dice, the Board decided to launch a rights issue to raise some £4 billion in capital. This was a spectacularly ‘bad’ decision, not because the issue was a complete flop with just over an 8% take-up, but because the prospectus that the Board approved was to put it mildly a ‘work of [half] fiction’, particularly as regards the level of provisions for credit defaults.
Continue reading “Board-Level People Risk – the HBOS Rights Issue”