BANKING giant HSBC will today announce that it is having to put aside another half a billion pounds to pay fines for breaking anti-money laundering regulations.
The bank’s lax security controls failed to stop drug dealers laundering money through the bank’s Mexican operations. In July it set aside $700m (£437m) to pay the anticipated fines, but today was forced to concede the bill could end up closer to $1.5bn, Sky News revealed last night.
The industry is already under enormous pressure from the payment protection insurance (PPI) mis-selling scandal – the biggest four banks have set aside more than £10bn to compensate customers. HSBC is today expected to announce it has set aside another £150m, taking its total provisions to £1.247bn. Last week Lloyds added another £1bn to its provisions, while RBS set aside an additional £400m to cover its expected compensation bills.
The industry also faces a huge raft of claims of interest rate swaps mis-selling from aggrieved small businesses. And many large banks stand accused of manipulating key interbank lending rate Libor and are likely to follow Barclays, which received a £290m fine from the FSA and US regulators in June. On Friday RBS said it is gearing up for talks with the FSA to settle claims it entered false data in Libor submissions.
HSBC said its household and business lending hit £38.3bn in the first nine months of 2012, up 11 per cent on last year. That is despite refusing to take part in the government’s Funding for Lending scheme, claiming its large depositor base provides cheaper funds.