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HSBC dragged into currency probe, reveals profit hike

November 5, 2013 at 1:02 am | News Desk

HSBC dragged into currency probe, reveals profit hike London: A worldwide probe into suspected rigging of foreign exchange trading has reached HSBC, Europe’s biggest bank revealed on Monday as it announced also a jump in quarterly profits.

The London-based bank revealed that global regulators are investigating 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 $3.2 billion (2.37 billion euros) during the three months to the end to September on major cost-cutting and lower bad debt charges.

HSBC had posted profit after tax of $2.5 billion in the third quarter of 2012.

“Revenue was stable in the third quarter (of 2013), influenced by the mixed global macroeconomic picture,” HSBC chief executive Stuart Gulliver said in a statement.

“Our home markets of the UK and Hong Kong contributed more than half of the group’s underlying profit before tax.”

Gulliver added: “Hong Kong continues to benefit from its close economic relationship with mainland China. We remain well positioned to capitalise on improving economic conditions in these markets.”

UK-headquarters-of-HSBCHSBC said it would continue to focus on reducing its cost base after savings of $400 million over the third quarter and total cuts since the start of 2011 of $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,” Gulliver said.

With traders focusing on the strong earnings, shares in HSBC rallied 3.01 percent to 708 pence in late afternoon deals on London’s benchmark FTSE 100 index, which was up by 0.56 percent at 6,772.47 points.

HSBC meanwhile joins British banks Barclays and Royal Bank of Scotland (RBS) 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 co-operating 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 banking sector has already been shaken by a rigging scandal related to the Libor, a benchmark interest rate for lending between banks which also determines numerous financial and interest rate contracts around the world.

That scandal has already resulted in more than $3.5 billion in government settlements with financial institutions, as well as ongoing criminal prosecutions of several traders involved.

Headquartered in London, HSBC was founded in Hong Kong and sees Asia as its main market. It has slashed costs by billions of dollars and axed tens of thousands of jobs since 2011 under a massive restructuring of the group.

The bank added on Monday that its pre-tax profits rallied 30 percent to $4.53 billion in the third quarter compared with the equivalent period last year.

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