Since taking over as chief executive in 2011, Stuart Gulliver has set about reforming the group and cleaning up earlier misdeeds
Stuart Gulliver

HSBC chief executive Stuart Gulliver on Monday found himself in the kind of situation he loathes — being quizzed by journalists and investors, both about poor performance at the bank and, worse still, about his own personal affairs.

But Mr Gulliver, whose temper can be infamously short was not his fizzy, cutting self. Those who heard him on the results conference calls agreed that after two weeks of fending off criticism of HSBC’s Swiss private banking misdemeanours, he sounded more beaten-down than belligerent.

He was asked repeatedly about the tax evasion scandal and about his own account at the Swiss unit, which it emerged at the weekend was held via a Panamanian company.

Mr Gulliver said there was no tax benefit to the Panamanian structure, which was disbanded in 2008 when he joined the bank’s main board and his pay started to be disclosed publicly. Instead, he said the structure was designed to avoid his colleagues in Hong Kong and Switzerland finding out how much he earned when he worked for HSBC’s investment bank and was for many years its top earner.

Tax experts said that using offshore corporate structures of this kind was rare in the banking world, but relatively common among hedge fund and private equity executives. Such a structure typically offers tax flexibility because income requirements can be released from a corporate entity as share sales, dividends or even via a loan secured on the assets of the company — all of which would often attract zero taxation at source offshore, and lower tax on receipt in the UK.

Mr Gulliver said there was “a completely everyday explanation” for the structure he had used. He said that in the 1990s the bank’s trading system in Hong Kong allowed everyone on it to see the bank accounts of their colleagues, which meant that many staff opened private accounts with the bank’s Swiss division.

“Being in Switzerland protects me from the Hong Kong staff. Being in Panama protects me from the Swiss staff,” he said. “There is nothing more complicated than that.”

Mr Gulliver pointed out that if he had not reversed his predecessor’s decision to relocate the chief executive role from London to Hong Kong, he would have paid much lower tax on his earnings. “I have paid UK tax on the entirety of my worldwide earnings,” he said.

He admitted that the tax-evasion allegations relating to HSBC for clients with accounts between 2005 and 2007 were “a source of shame” for him and several of his colleagues. He insisted his inclusion on the 2007 Swiss client list did not imply any personal wrongdoing. But one tax expert said the sophistication of his own affairs, plus his own later management responsibility for the division, added to grounds for criticising his handling of the affair.

Mr Gulliver declined to say whether he still had an account with HSBC’s Swiss private bank. He said his global career and long history of being based in Hong Kong justified his complex arrangements, but that had not made him a tax dodger: “I am a UK tax resident and I am Hong Kong domiciled,” he said. “I have paid UK tax on the entirety of my worldwide earnings.”

His 2014 remuneration of £7.6m was “entirely taxed in the UK as well as a part of it in Hong Kong,” he explained. “So I’ve never paid less than the UK marginal tax rate.”

As the last traces of defiance faded from Mr Gulliver’s explanations, morbidity took over as the final justification for his non-dom status. “I left the UK in 1980 and was posted back here,” Mr Gulliver said. “I have spent 35 years at HSBC. I will return to Hong Kong after this posting. I expect to die there.”

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