• The mp3 revolution

    Ian Mann takes a look at the war between digital music and the compact disc.

  • Don't take us for fools

    It's time for businesses to stop thinking consumers are gullible, says Mandi Smallhorne.

  • Losing the plot

    Parastatal leaders have lost focus of what they're supposed to do, says Nonkululeko Gobodo.

All data is delayed
See More

HSBC hurt by $2bn hit

Jul 30 2012 11:57

London - HSBC on Monday said its first-half profit fell after Europe's biggest bank took a $2bn hit to cover penalties from a money-laundering scandal in the United States and insurance mis-selling claims.

Earnings after tax dropped 8% to $8.44bn (€6.88bn) in the six months to June, compared with the same period last year, the Asia-focused bank said in a results statement .

HSBC took a provision of $700m to cover fines for failing to apply anti-money laundering rules, apologised again for the scandal and warned the overall cost could be "significantly higher."

The bank said it also set aside $1.3bn in the first half to compensate clients in Britain who were mis-sold insurance.

The London-based lender said it continued to cooperate with authorities after US lawmakers last month accused it of failing to apply anti-laundering rules, benefiting Iran, terrorists and drug dealers.

"It is not possible at this time for HSBC to know the terms on which a resolution of the ongoing investigations could be achieved or the form or timing of any such resolution," it said.

"Based on the facts currently known, HSBC has recognised a provision of $700m, which reflects HSBC's best estimate of the aggregate amount of fines and penalties that are likely to be imposed in connection with these matters.

"There is a high degree of uncertainty in making this estimate and it is possible that the amounts when finally determined could be higher, possibly significantly higher."

HSBC was thrown into crisis last month when a US Senate report found that it had allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

Lawmakers said money laundered through HSBC-linked accounts benefited Mexican drug lords and terrorist networks, and skirted US sanctions on Iran.

HSBC apologised again on Monday for the crisis which has already sparked the resignation of its head of compliance David Bagley.

"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," chief executive Stuart Gulliver said.

*Follow Fin24 on Facebook, Twitter and Google+.

hsbc  |  corruption


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The 25 basis points interest rate increase is:

Previous results · Suggest a vote