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Shamed HSBC takes $2bln hit

posted 30 Jul 2012, 09:06 by Mpelembe   [ updated 30 Jul 2012, 09:07 ]

HSBC's boss says revelations of lax anti-money laundering controls are "shameful and embarrassing" for Europe's biggest bank. Sonia Legg reports

UK-HSBC - "Shameful and embarrassing" - the words of HSBC's chief executive in relation to lax anti-money laundering controls.

Europe's biggest bank has set aside 700 million dollars to cover fines and other costs arising from the scandal but Stuart Gulliver accepts the final bill could be "significantly higher".

Earlier this month a US senate report criticised HSBC for letting clients shift funds from dangerous and secretive countries, notably Mexico.

It said there was a "pervasively polluted" culture at the bank.

"We apologise for our past mistakes in relation to anti-money laundering control," said Gulliver, "and it is a priority for senior management to build on steps already taken to manage risks and ensure compliance more effectively,"

The provision ate into first half underlying profits - they were down three percent on the year to 10.6 billion dollars.

The bank has had to set aside another 1.3 billion dollars to compensate British customers for mis-selling.

They mis-sold loan insurance to individuals and interest rate hedging products to small businesses.

HSBC is also one of more than dozen banks under scrutiny in the global interest rate-rigging scandal.

One investor said it was "deeply concerning" that even banks considered more secure were so seriously at risk.

HSBC shares - although up slightly - lagged Europe's bank index after the announcement.

Sonia Legg, Reuters.