The British bank's Swiss unit posted its second year of profits, after turning the corner in 2019. It booked more against potentially dud loans to the wealthy.

London-based HSBC's bank in Switzerland recorded a pretax loss of $16 million, according to its annual report released on Tuesday, from a $91 million profit last year. However, it eked out a profit after taxes in the country, the bank emphasized.

«While the Swiss business delivered a small loss in in terms of pre-tax profit, it posted a profit after tax due to the release of tax-related provisions,»  a spokesman for HSBC said. Run by CEO Alex Classen since 2018, the Swiss private bank’s profit follows years of losses.

It slimmed the Swiss wealth unit from more than 150 markets to roughly 20 and cut hundreds of jobs. On Tuesday, the wider HSBC group said it will pour roughly $6 billion into expanding in Asia, and especially in private banking, such as onshore China.

Forceful Asian Unit

The Swiss unit was forced to more than triple provisions against personal loans – largely to the wealthy – to $79 million, from $23 million in 2019. HSBC's private bank in Europe is also loss-making, while a forceful performance in Asia drove the overall unit's profit before taxes to $3.7 billion.

At HSBC overall, the business of wealthy and retail clients made for the lion's share of profits last year, just shading a markets division in an overall $8.78 billion profit before tax. The global wealth management arm attracted $6 billion of net new money, sharply lower than a record $23 billion swept in last year.

Past Scandals

Shortly before Classen took over, HSBC more closely aligned the Swiss unit with five other private banking units – the U.K., France, Germany, Luxembourg, and the Channel Islands. Classen, who previously had run the international unit of Coutts, took over at a bank that had been rocked by the data leak instigated by Hervé Falciani, a former data technician.

HSBC private bank Switzerland was also one of the so-called category 1 banks in the U.S., meaning that prosecutors were investigating its dealings with U.S. clients and offshore accounts. At the end of 2019, the bank was finally able to draw a line under the protracted tax dispute, as well as in 2017 a French investigation which still dogs UBS.