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HSBC legal bills hit earnings hard

HSBC legal bills hit earnings hard

(7 November 2012 – Global) HSBC has had to increase the amount it set aside for fines linked to money-laundering to US$1.5 billion (A$1.44 billion) as it could face criminal charges in the United States over the matter. The Asia-focused lender also announced in a results statement that net profits tumbled by 54 percent to US$2.498 billion in the third quarter, or three months to September, compared with a year earlier.

HSBC's earnings were hurt by an extra US$800 million provision over the money-laundering affair. It had already allocated US$700 million earlier this year and admitted on Monday the overall total could be 'significantly higher'.

The bank was thrown into a separate crisis earlier this year when a US Senate report found it had allowed affiliates in Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the US without adequate controls.

'The resolution of at least some of these matters is likely to involve the filing of corporate criminal as well as civil charges and the imposition of significant fines, penalties and/or monetary forfeitures,' HSBC added.

The bank in July apologised for failing to apply anti-laundering rules and one senior executive resigned. US politicians have accused the global bank of giving Iran, terrorists and drug dealers access to the US financial system.

The bank took another hit in Britain where it was fined US$353 million to compensate British clients who were missold payment protection insurance.

HSBC has so far booked a total provision of US$2.1 billion for the mis-selling scandal.
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