Europe's largest bank HSBC warned on Monday that a growing body of international regulations was putting its staff under unprecedented pressure and discouraging them from taking risks.
In a strongly worded statement, HSBC's chairman Douglas Flint called on international regulators to clarify what they expected of bank staff after a recent spate of record fines for misconduct had left them fearful of retribution.
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"There is ... 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 criticized with hindsight and perceiving a zero tolerance of error, seek to protect themselves and the firm from future censure," Flint said.
HSBC also flagged heightened geopolitical tension as it reported a 12 percent drop in pretax profits in the six months to the end of June to $12.3 billion, just below an average forecast of $12.5 billion from 15 analysts polled by the company.
The fall was mainly due to a weak first three months of the year, when profits fell 20 percent from a year ago when the bank's revenues were boosted by asset sales, and reflected lost revenues as a result of closing or selling businesses.
HSBC is in the second phase of a turnaround plan that began in 2011, aiming to make the bank less complex, more efficient and able to deliver better returns and dividends for shareholders.
The bank has axed more than 40,000 jobs and sold or closed 60 businesses, which it said has delivered annual cost savings of more than $5 billion.
But the asset sales have hurt revenues and replacing that is one of the biggest challenges facing HSBC.
HSBC's shares initially dropped 2 percent following the results but recovered to trade up 0.2 percent at 0855GMT.