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HSBC profits dive on vast charges

Nov 05 2012 12:23

London - HSBC said on Monday that third-quarter profits slumped after taking $1.15bn in extra charges for a money-laundering scandal in the US and insurance mis-selling claims in Britain.

Net profits tumbled by more than half to $2.498bn in the third quarter or three months to September, compared with $5.222bn a year earlier, HSBC said in a results statement.

The bank revealed that it has set aside another $800m to cover fines from US authorities for failing to apply anti-money laundering rules, taking its total bill to $1.5bn.

The lender also took another charge of $353m to compensate clients who were mis-sold payment protection insurance, in a scandal which has blighted British banks. That took HSBC's total PPI compensation bill to $1.8bn.

"The third quarter results include an additional provision of $800m in relation to the ongoing US anti-money laundering, Bank Secrecy Act and Office of Foreign Assets Control investigations," said HSBC chief executive Stuart Gulliver.

"We are actively engaged in discussions with US authorities to try to reach a resolution, but there is not yet an agreement. The US authorities have substantial discretion in deciding exactly how to resolve this matter.

"Indeed, the final amount of the financial penalties could be higher, possibly significantly higher, than the amount accrued.

"We have also made UK customer redress provisions of $353m, mainly in respect of Payment Protection Insurance."



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