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By Steve Slater
LONDON, Feb 11 (Reuters) - HSBC's Swiss privatebank has seen a steep drop in profits since 2008 and even fellto a loss in 2013, showing how problems in the business have hitthe British bank's bottom line as well as its reputation.
Its Swiss private bank lost $291 million in 2013, the lastset of published full-year results, and only scraped a $14million profit in the first-half of 2014. HSBC is due to release2014 full-year results on Feb. 23.
HSBC this week admitted failings in compliance and controlsin its Swiss private bank after media reports alleged it helpedwealthy customers conceal millions of dollars of assets in aperiod up to 2007.
The Swiss arm's profits have fallen steeply every year since2008, when they peaked at $553 million and represented 6 percentof HSBC's total earnings.
The same year HSBC said it began a radical transformation ofits Swiss private bank to prevent it being used to evade taxesor launder money. Swiss-based banks have been under fire forhelping clients avoid taxes for several years, prompting aclampdown across the industry.
HSBC has said it has shed clients who did not meet newstricter standards and has spent more on compliance. It saidthere were a large number of client withdrawals in 2013, theyear the Swiss private bank dropped into the red.
HSBC, which had 10,343 Swiss accounts at the end of 2014,compared to more than 30,000 in 2007, this week said pastcompliance and controls failed, but said its Swiss business hadsince been transformed.
The Swiss private bank was effectively built from its $10billion purchase in 1999 of Republic National Bank of New Yorkand Safra Republic Holdings, banks controlled by Lebanesefinancier Edmond Safra.
From a $100 million profit in 2002, the first year thatresults were broken out, the Swiss bank's profit grew steadilyuntil its 2008 peak. The business made a total $3 billion profitin the decade to the end of 2012, according to Reuterscalculations.
HSBC said the business was not properly integrated after itwas bought in 1999.
The same criticism has been leveled at the bank for bigacquisitions made in subsequent years, including its purchase ofMexico's Grupo Financiero Bital in 2002 and its $15 billion buyof U.S. consumer finance firm Household in 2003. Those threedeals have been at the heart of many of the bank's problems withU.S. and European authorities.
Current Chief Executive Stuart Gulliver has said the bankhas a poor track record on deals. "We're good at running our ownbusinesses, we're not so good at making acquisitions," he saidin 2012.
Tax authorities are investigating details of HSBC's Swissclients and the renewed scrutiny has sparked a political row inBritain over which parties had links to people who held theaccounts. (Reporting by Steve Slater; Editing by Alexander Smith and JaneMerriman)
