Tax is just one of HSBC’s problems

In all the coverage of HSBC's Swiss private banking arm and Stuart Gulliver's banking arrangements (channelled through Switzerland and Panama), it is easy to miss the fact that HSBC has more broadly had a torrid year.

Its return on equity (the key marker of the return a bank is making on the money it invests) has fallen from 9.2% to 7.3%.

Its earnings per share are down.

Its operating expenses - the amount it costs to run the bank - are up 6.1%, largely down to huge regulatory changes which now mean the simple cost of being a global financial institution is much higher.

On top of that, fines and "redress" (for foreign exchange manipulation, payments for the mis-selling of payment protection insurance to individual customers and interest rate products to businesses) total £2.4bn.

The bank has also raised significant concerns over Europe and Britain's membership of the European Union.

HSBC - which is head-quartered in the UK - said that reform is "far less risky than going it alone".

The global banking model is under significant strain and it is little wonder HSBC's share price is down nearly 6% this morning.

Putting it in perspective

Of course, there is a need for perspective. HSBC's balance sheet is very strong, its capital position is robust and £1bn a month in profit is not exactly struggling.

The bank's chief executive, Stuart Gulliver, admitted that the bank's rapid growth from under 140,000 employees in the mid-1990s to over 300,000 a decade later had not been matched by increases in governance controls.

He said the bank had done a lot since the financial crisis to simplify its business, selling 77 divisions and cutting staff to 257,000.

On the conference call this morning, Mr Gulliver suggested there may be further to go - which must be a worrying thought for the 47,000 people employed in the UK alone.

Paras Anand, analyst at Fidelity World Wide Investment, told me that 2014 had been disappointing for HSBC but, long term, there were still plenty of advantages to being a global bank.

"Today's disappointment is tomorrow's opportunity," he said, pointing out that there were few banks in the world as well positioned as the Hong Kong and Shanghai Banking Corporation for growth in Asia.

Stuart Gulliver was the highest paid director at HSBC in Hong Kong

'Everyday explanation'

With so many regulatory and misconduct issues, the last thing Mr Gulliver wanted was questions about his own tax affairs.

But he became part of the story when The Guardian revealed last night that he had both a Swiss bank account and a Panamanian corporate account as a repository for his bonus payments in the 1990s and early 2000s.

This morning, Mr Gulliver said the arrangement was nothing to do with tax, which he said he had paid at the highest rate in the UK on all his global earnings since he moved to Britain in 2003.

It was actually to do with confidentiality.

In Hong Kong - where Mr Gulliver worked in the 1990s - the investment banking computer system allowed staff to see details of other people's remuneration.

In order to keep those payments confidential (Mr Gulliver was the highest paid director in Hong Kong) he opened a Swiss account, as did, apparently, many of his colleagues.

He was then advised by the Swiss banking arm of HSBC to open a Panamanian account to keep payments secret from colleagues in the Swiss business.

Mr Gulliver, who has since rid himself of the Panamanian account, said that this was a "completely everyday explanation".

Which of course reveals that Mr Gulliver's "everyday" is pretty different from most peoples.