HSBC likely to face criminal charges for money laundering

PUBLISHED : Tuesday, 06 November, 2012, 12:00am
UPDATED : Tuesday, 06 November, 2012, 4:54am

HSBC Holdings, Europe's largest bank by market value, said yesterday it was likely to face criminal charges stemming from US anti-money laundering investigations. It said the cost of a settlement could "significantly" exceed the US$1.5 billion the bank had already set aside.

HSBC had in July made a US$700 million provision for possible fines after a US Senate committee found it had given terrorists and drug cartels access to the country's financial system. The bank made an additional US$800 million provision in the third quarter to cover the costs of the investigation.

"The final amount of the financial penalties could be higher, possibly significantly higher," HSBC said in a statement. "The resolution of at least some of these matters is likely to involve the filing of corporate criminal as well as civil charges."

HSBC chief executive officer Stuart Gulliver said: "We are actively engaged in discussions with US authorities to try to reach a resolution, but there is not yet an agreement."

The bank's underlying pre-tax profit was up 125 per cent to US$5 billion in the third quarter, but missed the US$5.6 billion median estimate of eight analysts surveyed by Bloomberg.

HSBC had hoped to settle the money laundering case by September, but could have been impeded by another case in which the New York State Department of Financial Services accused Standard Chartered of laundering US$250 billion for Iran.

In its latest profit announcement, HSBC said 267,000 people were under its employ at the end of the quarter, almost 22,000 lower than the number at the end of last year after global restructuring plans to boost efficiency.

At midday on the London Stock Exchange, HSBC shares were trading at 616.4 pence, down 1.55 per cent from last Friday's close.