HSBC Sets Aside Extra $800Million for U.S. Money Laundering Case

LONDON -- HSBC Holdings said on Monday that it had set aside a further $800 million connected to a money-laundering investigation in the United States as the bank's net profit halved in the third quarter of the year. The bank, which is based inLondon, said it had made the new provision to cover potential fines, settlements and other expenses related to the money-laundering inquiry as the firm continued to negotiate with U.S. authorities. In total, HSBC has now earmarked a combined $1.5 billion for expenses related to the case. The figure does not include legal costs. The announcement follows a U.S. government report earlier this year that accused HSBC of helping clients to illegally bring money into the U.S. that waslinked to drug trafficking activities and from Middle Eastern banks with ties to terrorists. "We deeply regret what took place took place in the United States and Mexico," HSBC's chief executive, Stuart Gulliver, told reporters on a conference call on Monday. "A numberof people have left the bank and have had clawbacks against their compensation," related to the case. The bank added that a resolution to the matter would probably include corporate criminal and civil charges, as well as sizeable fines against the bank. HSBC said some of the charges could be offset through a potential settlement agreement. The firm did not say when a settlement with U.S. authorities could be announced. The new provisions related to the money-laundering case and additional $353 million set aside to compensate British customers who were inappropriately sold insurance weighed on HSBC's third quarter net results. The bank said its net profit halved, to $2.8 billion, in the three months through Sept. 30, compared with thesame period last year. The British firm also said it had incurred a quarterly chargeof $1.7 billion on the value of its own debt. Without the adjustments, HSBC's pretax profit in the third quarter more than doubled, to $5 billion. The unadjusted figure was slightly below many analysts' estimates.