HSBC probed in allegedly rigging forex deals while profit rises 28%
Print Edition
A WORLDWIDE probe into suspected rigging of foreign exchange deals has reached Europe’s biggest bank HSBC, the bank revealed yesterday when it also announced a jump in quarterly profits.
The London-based bank said in its earnings statement that British regulator, the Financial Conduct Authority, is conducting investigations alongside several other global agencies into a number of firms, including HSBC, “relating to trading on the foreign exchange market.”
HSBC added that it was “cooperating with the investigations which are at an early stage.”
It comes as the British bank announced a 28 percent increase in net profit to US$3.2 billion during the three months to the end of September on major cost-cutting and lower bad debt charges.
HSBC had posted profit after tax of US$2.5 billion in the third quarter of 2012.
“Revenue was stable in the third quarter (of 2013), influenced by the mixed global macro-economic picture,” HSBC Chief Executive Stuart Gulliver said.
“Our home markets of the UK and Hong Kong contributed more than half of the group’s underlying profit before tax.”
Gulliver said Hong Kong continues to benefit from its close economic relationship with China’s mainland. “We remain well positioned to capitalize on improving economic conditions in these markets.”
HSBC said it would focus on cutting its costs after savings of US$400 million over the third quarter and total cuts since the start of 2011 of US$4.5 billion.
“This is well in excess of the target we set out to achieve by the end of 2013. We re-invested part of these savings in risk and compliance, increasing headcount by 1,600 since December 2012,” he said.
HSBC meanwhile joins British banks Barclays and Royal Bank of Scotland in saying that they are part of the foreign exchange market investigations.
Deutsche Bank, Swiss lender UBS and US pair Citi and JPMorgan Chase have also come forward to say that they are cooperating with regulators over the affair.
According to sources close to the matter, Barclays has suspended six traders while it investigates the possible manipulation of foreign exchange markets, and RBS has suspended two.
The sector has already been hit by a rigging scandal related to the Libor, a key interest rate for lending between banks.
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