HSBC 'sorry for mistakes'

HSBC chairman has apologised for making "mistakes in the past, and for them I am very sorry." They have set aside £446m top pay for the money laundering scandal and £495m for mis-selling of PPI and credit swaps.

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HSBC apologises for laundering scandal, announcing £446m provision

by - Former Business Editor

In another banking apology, HSBC chairman Douglas Flint says "[we have] made mistakes in the past, and for them I am very sorry," referring to the money-laundering scandal in the US.

In particular areas we fell short of the standards that I, my colleagues, our regulators, customers, and investors expect.

– Douglas Flint, HSBC Chairman

As well as saying sorry, HSBC has put aside $700 million (£446 million) in costs for the scandal.

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HSBC's Cayman Islands subsidiary handled 52,000 clients but had no staff

The US Senate's investigation into money laundering through HSBC found that a Cayman Islands subsidiary set up by the bank's Mexico division handled some 50,000 clients but employed no staff.

Money from the Cayman Islands had been used to buy jets for Mexican drug lords, according to senators.

Those accounts are in the process of being shut down, the former head of compliance at the bank said.

HSBC accused of dealing in proceeds of Mexican drug trafficking

HSBC's compliance standards have been slammed by the US Senate for allowing its subsidiaries to deal with the proceeds of crimes.

In particular, the bank's Mexican division was singled out for moving some $7 billion (£4.5 billion) into the bank's US business, much of which was tied to drug traffickers.

One former HSBC anti money-laundering director flagged up his concerns that "60 to 70 percent of laundered proceeds in Mexico" was going through the bank's local affiliate.

What the papers say about HSBC revelations

The revelations about HSBC occupy several front pages of British newspapers. Here's a selection of the headlines:

  • Daily Mail: HSBC let drug gangs launder billions
  • The Times: HSBC was used to 'clean drugs money'
  • Guardian: HSBC shame over cash for drug barons
  • Associated Press: HSBC compliance chief steps down after lax controls exposed bank to illegal activity

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HSBC share price hit by money laundering report

HSBC building in Canary Wharf
HSBC has seen its share price drop by almost 1.7% Credit: REUTERS/Kieran Doherty

HSBC has seen its value take a knock after being condemned by a US Senate committee for money laundering.

The banking giant's shares closed down 9.4 pence in London, a 1.69 % drop.

The group is set for a massive fine from the US Justice Department, which some analysts estimate could be $1 billion.

HSBC played 'fast and loose with US banking rules'

David Bagley (far left)
David Bagley (far left) is sworn in with current and former HSBC executives Credit: Gary Cameron / Reuters

Subcommittee chairman Senator Carl Levin said HSBC used its US bank as a gateway into the American financial system for its affiliates around the world while "playing fast and loose with US banking rules".

He said: "Due to poor anti-money laundering controls, HBUS (HSBC's US operations) exposed the United States to Mexican drug money, suspicious travellers cheques, bearer share corporations, and rogue jurisdictions."

Fallen HSBC boss admits bank's failings

Mr Bagley said he had told senior management that it was the "appropriate time" for "someone new to serve as the head of group compliance".

In his written submission, he said HSBC had "learned a number of valuable lessons" and partly blamed the oversights on the bank's rapid growth.

The bank underestimated some of the challenges presented by its numerous acquisitions, and despite efforts to meet these challenges, we were not always able to keep up.

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