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30Jul12
HSBC sets aside $2 billion for mis-selling, U.S. issues
HSBC set aside $2 billion to cover U.S. law enforcement and regulatory costs and to compensate British customers for mis-selling as it reported a 3 percent dip in underlying profit.
A U.S. Senate report this month criticized HSBC for letting clients shift funds from dangerous and secretive countries, and HSBC said on Monday it was setting aside $700 million to cover "certain law enforcement and regulatory matters".
Analysts have said the issue could result in a fine of about $1 billion.
The Senate report criticized a "pervasively polluted" culture at the bank and said, between 2007 and 2008, HSBC's Mexican operations moved $7 billion into the bank's U.S. operations.
Chief Executive Stuart Gulliver on Monday apologized for the affair.
"We apologize for our past mistakes in relation to anti-money laundering controls, and it is a priority for senior management to build on steps already taken to manage risk and ensure compliance more effectively," he said.
Europe's biggest bank set aside $1.3 billion to compensate UK customers for mis-selling loan insurance and interest rate hedging products to small businesses.
HSBC on Monday reported a pretax profit of $12.7 billion for the six months to the end of June, up 11 percent on the year and above an average analyst forecast of $12.5 billion, according to a poll by the company. But underlying profit, stripping out gains from U.S. assets sales and losses on the value of its own debt, was down 3 percent on the year to $10.6 billion.
Shares in HSBC were down 0.1 percent to 530.8 pence at 0855GMT, lagging a 1.2 percent rise in Europe's bank index.
[Source: Reuters, London, 30Jul12]
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