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Showing posts with label Stuart Gulliver. Show all posts
Showing posts with label Stuart Gulliver. Show all posts

Tuesday 31 July 2012

HSBC’s US$2b cover Money is for cost of US probe and compensation

LONDON: HSBC's chief executive has apologised for shameful and embarrassing mistakes made on anti-money laundering controls as the bank set aside US$2bil to cover the cost of US investigations and compensate UK customers for misselling.

Europe's biggest bank reported a 3% dip in underlying profit and said it had made a provision of US$700mil to cover “certain law enforcement and regulatory matters” after a US Senate report this month criticised HSBC for letting clients shift funds from dangerous and secretive countries.

The report criticised a “pervasively polluted” culture at the bank and said that HSBC's Mexican operations had moved US$7bil into the bank's US operations between 2007 and 2008.

Gulliver: ‘What happened in Mexico and the United States is shameful, it’s embarrassing, it’s very painful for all of us in the firm.’
 
“What happened in Mexico and the United States is shameful, it's embarrassing, it's very painful for all of us in the firm,” chief executive Stuart Gulliver told reporters on a conference call yesterday, adding that the eventual costs could be “significantly higher”.

“We apologise 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,” Gulliver said.

Analysts had said the US investigations could result in a fine of about US$1bil.

HSBC is also one of several banks being investigated in a global interest rate rigging scandal that has rocked the sector. Gulliver said it had submitted information to regulators but it was far too early to say what the outcome would be or to estimate the potential cost for the bank.

HSBC has set aside US$1.3bil to compensate UK customers for misselling loan insurance to individuals and interest rate hedging products to small businesses.

The bank reported a pre-tax profit of US$12.7bil for the six months to the end of June, up 11% on the year and above an average analyst forecast of US$12.5bil, according to a poll by the company.

But underlying profit, stripping out gains from US assets sales and losses on the value of its own debt, was down 3% on the year to US$10.6bil.

Shares in HSBC were up 0.7% to 534.6 pence, lagging a 1.8 % rise in Europe's bank index. Reuters  

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