HSBC's private bank pushed the British lender to a pre-tax loss in Switzerland, from a year-ago profit. It comes amid plunging profits for the parent bank, which girded for big credit losses.

The London-based, Asia-focused bank swung to a loss before taxes of $12 million at its Swiss bank for the six months of June 30 from a profit of $11 million year-ago, according to its annual report released on Monday. Under Alex Classen, HSBC in Switzerland had just returned to profits in 2019 following years of losses, as finews.com reported.

The result was driven by an $15 million pre-tax loss at HSBC's private bank in Switzerland. A spokesman declined to detail the reasons behind the loss, which comes against the backdrop of a 69 percent plunge in net profit for HSBC, the parent, which swallowed almost $7 billion in charges for expected credit defaults.

Eye On Credit Defaults

In Switzerland, HSBC's expected credit losses totaled $75 million. Its Swiss commercial bank lifted the six-month profit to $3 million from $2 million, and its Swiss investment bank swung to a profit of $1 million, compared to a $2 million year-ago loss.

Classen took over a Swiss wealth unit two years ago which had shrunk from more than 150 markets to roughly 20 as well as cut hundreds of jobs. By the end of last year, the Swiss bank was finally able to draw a line under the protracted tax dispute with the U.S. government for $192.35 million.

Tightrope Over China

The reading comes as HSBC walks a tightrope in Asia: the bank drew fire for backing China in a controversial security law for territory Hong Kong. Though listed in London, HSBC generates roughly half its revenue from Asia.

The security law is frequently perceived as a sweeping measure to stifle any acts deemed threatening to the state, while backers highlight its potential to provide stability in the city. It includes provisions to give authorities more power to freeze and confiscate money and property and to get at information.

«Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC’s footprint,» CEO Noel Quinn acknowledged. «We will face any political challenges that arise with a focus on the long-term needs of our customers and the best interests of our investors.»