Fitch Ratings has placed HSBC’s Swiss private banking operation on rating watch negative following the news of a large breach of client data.

The rating agency put Geneva-based HSBC Private Banking Holdings (Suisse) SA on ‘rating watch negative’ after it was reported that data relating to the accounts of around 15,000 existing and 9,000 former clients at the firm’s main operating subsidiary in Switzerland has been stolen. Fitch said the move reflects its opinion that “this is a serious operational incident which could potentially have reputational repercussions for HSBC’s private banking franchise.”

The firm reported that earlier this month the Swiss authorities alerted the bank to data which showed that client information had been compromised. The theft, which was allegedly perpetrated by a former IT employee about three years ago, involves approximately 15,000 existing clients who had accounts with the bank in Switzerland before October 2006.

The stolen client information is limited to accounts in Switzerland, and the bank says that data wasn’t compromised for any branches of the bank outside Switzerland, which operate on separate systems.

“We deeply regret this situation and unreservedly apologize to our clients for this threat to their privacy,” said Alexandre Zeller, CEO of HSBC Private Bank (Suisse) SA. “We are determined to protect our clients’ interests and are taking every necessary measure to do so, actively contacting all our clients with Swiss-based accounts.”

The bank said it has already made significant improvements to its security, spending more than 100 million Swiss francs to upgrade systems and improve security, and that it is cooperating with the Swiss authorities. It also said that the Swiss authorities confirmed that “they will not support the use of the stolen data to answer requests from foreign authorities.”

Fitch says it will resolve the rating watch negative once the reputational and financial impact of this incident on HSBC PB’s financial profile and franchise has emerged. Factors the agency will be assessing include the behaviour of existing clients, potential legal and regulatory consequences and improvements in HSBC PB’s control framework.

IE