HSBC profit hit by $800m charge for US fine, cuts 30,000 jobs

HSBC has taken a $1.15 billion hit to cover a potential US fine for lax anti-money laundering controls and to pay compensation for mis-selling products in Britain, eating into its quarterly profit.

While HSBC’s earnings were helped by a sharp drop in bad debts, it set aside $800 million to cover a potential fine from US regulators for breaches in anti-money laundering controls in Mexico, adding to $700 million put aside in July.

HSBC, Europe’s biggest bank, said on Monday no agreement had been reached with US authorities and the final resolution will likely involve criminal as well as civil charges. It said there was a high degree of uncertainty estimating the final cost and it was possible the amount will be significantly higher.

The bank reported an underlying profit - after stripping out the impact of disposals and changes in the value of its own debt - in the July-September quarter of $5.0 billion, up from a revised $2.2 billion a year earlier.

HSBC took another $353 million charge for mis-selling in Britain, mainly for payment protection insurance.

HSBC cuts 30,000 jobs, sees more to come

HSBC has reduced its number of staff by almost 30,000 in the last two years and said more job cuts are likely across the bank to achieve its cost efficiency targets. The bank had 266,700 staff at the end of September, down from 296,000 at the end of 2010 and down about 21,000 this year.

HSBC Chief Executive Stuart Gulliver said about 15,000 of the reduction were due to disposals by the bank and he expected more cuts before the end of 2013 to improve cost efficiency.

Reuters