HSBC Mexico's sales of structured products will not be affected by the recent debacle involving the bank's breach of anti-money laundering controls, according to structured products expert at Santander Mexico.
"Investors are not really worried about this recent event," he said. "They are more worried about the liquidity crisis within the continental European banks. We expect the bank to have bigger issues with the regulator than with investors as a consequence of this."
The source said that unless something major occurs - including the downgrade of the British bank - HSBC Mexico's sales of structured products will remain stable. "Some of us here think that HSBC's rating will be lowered, others do not," he said.
According to the source, HSBC has recently been offering structured products with lower rates than it was previously offering, yet Mexican investors have continued to buy HSBC-backed products.
The expert believes that clients are choosing HSBC structured products even with lower rates over those offered by Spanish banks, including Santander, as a result of the bad press and concerns surrounding the Spanish banking sector.
Sales at Santander Mexico have decreased as a result of a recent downgrade by ratings agencies. The source said, however, that investors must understand that the liquidity crisis is happening in Spain, not in Mexico.
HSBC announced that it has paid a fine totalling MXN379m ($27.5m) to the Mexican regulator for breaching anti-money laundering controls. "The infringements related to the late reporting of 1,729 unusual transactions, the failure to report 39 unusual transactions and 21 administrative failures," said HSBC in a statement.
HSBC declined to comment.