MORE doom and gloom was heaped on the banking sector yesterday after the UK’s biggest bank HSBC set aside an extra £720m to cover charges for money-laundering in the US and mis-sold insurnace in the UK.
The latest round of bank results has been over-shadowed by huge sums of money being put aside to cover mis-sold payment protection insurance (PPI) and comes hot on the heels of the Libor-fixing scandal.
Barclays, Lloyds and RBS all raised their charges for PPI. RBS said it hopes to follow Barclays and settle its own Libor investigation soon.
HSBC, which owns Leeds-based First Direct, has set aside £500m to cover fines from US authorities which accused the bank of inadvertently allowing rogue states and drug cartels to launder billions of pounds.
The lender has set aside £935m in total to cover the potential scandal, but warned the cost could be “higher, possibly significantly higher”.
HSBC is providing an extra £220m to cover compensation for mis-selling PPI, pushing its total PPI bill to £1.2bn.
The US Senate findings against HSBC, which accused the bank of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria, led to the resignation of head of compliance David Bagley.
The revelations also heaped pressure on business minister Lord Green, who was HSBC chairman when the failings took place.
Group chief executive Stuart Gulliver said: “We are actively engaged in discussions with US authorities to try to reach a resolution, but there is not yet an agreement. The US authorities have substantial discretion in deciding exactly how to resolve this matter. Indeed, the final amount of the financial penalties could be higher, possibly significantly higher, than the amount accrued.”