Nov 3, 2014 9:42 AM
HSBC sets aside $378 million for currency probe
The Associated Press
LONDON (AP) HSBC, Europe's biggest bank, set aside $378 million Monday for possible fines arising from probes into foreign exchange manipulation, joining other major British lenders in bracing for the outcome of the investigations.
The provision was just one of a series of charges that boosted one-time expenses to $1.7 billion in the third quarter from $784 million in the same period last year. The Royal Bank of Scotland and RBS also set aside millions to pay for potential currency probe fines.
The set asides suggest the banks believe fines for the currency scandal threaten to eclipse those associated with the rigging scandal surrounding the London interbank offered rate, or Libor, a benchmark for consumer interest rates around the world.
HSBC, which does business in 74 countries and territories, says the charges and higher costs in a number of markets increased operating expenses by 15.7 percent to $11.1 billion.
"We are committed to achieving additional sustainable savings by further streamlining our processes and procedures," CEO Stuart Gulliver said in a statement Monday.
Net income in the third quarter ending Sept. 30 rose 7.2 percent to $3.43 billion.
Meanwhile, the bank accounted for a $550 million settlement with American's Federal Housing Finance Agency to cover the sale of mortgage bonds before the financial crisis.
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, announced the settlement in September. The U.S. government rescued Fannie and Freddie at the height of the financial crisis in September 2008 when they were on the verge of collapse.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said that it was a strong quarter for the bank, if regulatory provisions were stripped out.
"Unfortunately, the provisions cannot be ignored," he said.