HSBC chief executive Stuart Gulliver and chairman Douglas Flint have apologised to MPs for "unacceptable" activities at the bank's Swiss subsidiary, where clients were advised on tax avoidance schemes, which they said had done "horrible reputational damage" to the bank.
Mr Flint told the House of Commons Treasury Committee he felt "very ashamed" over failings exposed by the 2009 leak of account data by a whistle-blower, but insisted that those most accountable for the scandal were the local management at HSBC Suisse in the mid-2000s, as well as the lower-ranking "relationship managers" who had direct dealings with clients.
He rejected a suggestion that he and Mr Gulliver should lose their jobs and made clear he would not give up past bonuses in response to the scandal, saying that staff in Switzerland had "let down" the bank.
Meanwhile, HM Revenue and Customs chief executive Lin Homer announced that French authorities have formally agreed that the leaked information can be shared with other law enforcement agencies and regulators for the purpose of pursuing criminal offences. HMRC will meet the Serious Fraud Office, Financial Conduct Authority, Crown Prosecution Service, City of London Police, National Crime Agency and EuroJust next week to discuss how the data can be shared for possible investigations.
Mr Gulliver defended his decision to be paid via a Panamanian company and an account in the Swiss private bank, insisting that the arrangement was not designed to avoid tax but to protect his privacy against other members of staff.
He acknowledged that the arrangements looked "unfamiliar and rather strange" to outsiders, but insisted: "There was no tax advantage or purpose whatsoever."
Mr Gulliver - who has worked for HSBC for 35 years and became chief executive in 2011 - told the committee: "I would like to put on the record an apology from both myself and Douglas for the unacceptable events that took place at our private bank in Switzerland in the mid-2000s. It is an apology we would like to make to you, our customers, our shareholders and the public at large.
"It clearly was unacceptable. We very much regret this, and it has damaged HSBC's reputation."
Asked precisely what he was apologising for, Mr Gulliver said: "The lack of controls and practices which now - judged with the benefit of hindsight - we would not be at all comfortable with if they were happening today, and which have clearly resulted in damage to trust and confidence in HSBC."
Mr Tyrie read out a long list of "regulatory problems" HSBC was currently facing, including PPI mis-selling, interest rate derivative mis-selling, Forex manipulation and violation of international sanctions.
Mr Flint said: "It is a terrible list ... One of the most humbling things that has happened in my career is a recognition of all the things you did not know, and you go and say 'what could I have known or what should I have known?'"
Mr Gulliver was challenged by Labour MP Mike Kane over whether he had "the moral authority" to push through reforms to clean up HSBC.
He responded: "I believe the changes I have made to the firm clearly demonstrate the sincerity of my desire actually to change HSBC."
Asked if he would consider himself "a fat cat", Mr Gulliver told Mr Kane: "You would have to define 'fat cat' for me to be able to comment more meaningfully on that."
Mr Flint said that direct responsibility for events at HSBC Suisse rested with local management in the country and the "relationship managers" who worked directly with clients - only 30% of whom were still with the group.
He added: "I believe in personal accountability and I do believe people should be held responsible for what they have direct oversight over when they have failed."
The executives who led HSBC Group private banking during the time in question, Chris Meares and Clive Bannister, "certainly bear fairly direct responsibility for what went on in the private bank during their stewardship," he said.
But he added: " The individuals that I think are most accountable both for the data theft and the weakness that allowed that to happen, and for the behaviour that was unacceptable in relation to our standards were the management on the ground in Switzerland.
"Looking deeper than that, I think we were all let down and the most culpable people are the relationship managers who did what they did. But clearly there was a failure to govern them as well as they should have been."
Former HSBC chief executive Stephen Green - who went on to become a peer and Government minister - was "responsible along with the rest of the management team for the control environment at the time," he added.
Mr Flint rejected the suggestion of SNP MP Stewart Hosie that the Swiss private bank regarded anti-laundering regulations as "simply a hurdle to get past in order to be able to serve clients".
"I believe they took them seriously," said Mr Flint. "We are suffering from horrible reputational damage. A bank lives on its reputation. No bank wants to associate itself with activities, behaviours or clients that would do it damage."
Mr Flint said that he and Mr Gulliver accepted "responsibility as part of the management team".
But Conservative MP Alok Sharma retorted: "You are not prepared to take personal responsibility for your part as finance director and as a member of the board. I have to say to you, people watching this in the court of public opinion - our constituents, your customers - will actually find you quite wanting in not being willing to take personal responsibility."
Labour backbencher John Mann berated Mr Flint for "daring" to complain about "data theft" in relation to the leaking of the Swiss account details.
"Is that not a good thing ... that the public can find out, we can find out, regulators can find out things that you failed to look after and you failed to report in?" Mr Mann said.
"No, I don't think it is a good thing," Mr Flint replied. "We should have a system that does not rely on data theft."
Mr Flint dismissed suggestions from Mr Mann that he should sack Mr Gulliver and resign himself, saying they had been brought in after the financial crisis to clean up operations.
"I think Mr Gulliver is doing an outstanding job and I have absolutely every confidence in him, as does the board," he added.
Ms Homer told the committee that HMRC had been prevented from sharing the account data in "wider law enforcement" agencies over the last five years.
"What we have missed out on potentially are wider offences and the ability to interrogate the data with colleagues," she told the committee.
"One of the big challenges for us with the Swiss data is it was poor quality data, it was stolen from another jurisdiction."
Ms Homer said HMRC had faced "serious limitations" because of the restrictions on using the data but had recovered £120 million in tax and interest and penalties worth about £15 million had been imposed.
"It has taken us a long time to get to this point," she added.
Around 100 cases on the files are outstanding, the committee was told.
"We think a few more million (in tax) will come from that," Ms Homer said.
"What we have not tried to estimate, because it is a little bit more difficult to say, is what level of on-going tax we are going to receive as a result of these people now being compliant for the future but I would estimate that there are many tens of millions in that category as well.
"We have a little bit more to do but we have pursued everybody we believe owes us tax."
Ms Homer said that decisions not to press for prosecution on the basis of the Swiss data were due to "the quality of the evidential trail", rather than because of the restrictions placed on use of the material by France.
HMRC has previously denied claims that it failed to respond to an email from whistle-blower Herve Falciani offering to pass them data from "one of the world's top five private banks", based in Switzerland.
Ms Homer told the committee that, having examined a copy of the email published earlier this month in French newspaper Le Monde, it appeared it had been sent to a regional VAT address at HMRC and to a former secretary of state's private office at the Foreign Office. Both accounts have since been closed, and no record has been found of the message, or of it having been passed on to those responsible for investigations, she said.