HSBC Profits Halved As Bank Takes More Hits

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HSBC (LSE: HSBA.L - news) has announced a 51% fall in third quarter profit, as the bank takes further hits on US anti-laundering fines and mis-selling insurance in the UK.

It confirmed it was setting aside another $800m (£500m) to cover fines from US authorities, taking the total bill to $1.5bn (£937m).

The bank warned no agreement has been made and the cost of its laundering actions, much of it suspected to come from Mexican drug cartels, could be "higher, possibly significantly higher".

Sky City Editor Mark Kleinman exclusively reported the £500m hit over laundering fines on Sunday.

HSBC, Europe (Chicago Options: ^REURUSD - news) 's biggest bank, said the final resolution will probably involve criminal as well as civil charges.

The bank said it also set aside an extra $353m (£220m) to compensate UK customers over mis-selling of payment protection insurance (PPI), raising the total estimated cost to £1.12bn.

The additional penalties, as well as the impact of the value of its own debt, triggered a 52% slide in the bank's reported pre-tax profits for the three months to September 30, down to $3.5bn (£2.2bn).

"The US authorities have substantial discretion, and prior settlements can provide no assurance as to how the US authorities will proceed in these matters," the bank said.

Earlier this year, HSBC paid a fine of $28m (£17m) to Mexican authorities for non-compliance with money laundering controls.

American investigators released a report which said some $7bn had been physically transported within 24 months across the border from Mexico to the US.

The US investigations sparked by the Mexican offences prompted CEO Stuart Gulliver to launch an overhaul of the bank’s compliance operation.

HSBC has also become embroiled in the Libor rate-fixing scandal after two US state attorney generals launched investigations.

Meanwhile, the bank remains third place in Asia with assets under management, holding $129bn (£80.74) or some 11%, of the total invested in 2011.

The figure held was a slight increase from $128bn in 2010, according to industry publication Private Banker International.

:: Shares in HSBC were down more than 2% in early Monday trading, and the bank was at one point the biggest faller on the FTSE 100 (FTSE Index: EO100.FGI - news) .

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