LeapRate yesterday reported that financial giant HSBC Holdings plc (LON:HSBA) had set aside a further $550 million for further potential financial penalties with regard to its part in the manipulation of FX rates.
One day later, the bank’s shares have dropped by 4.5%, taking $5 billion off its stock market value.
The annual report detailed lower than expected profits and warned of the risk of investigations by regulators around the world, clearly denoting that November’s $611 million penalty which was administered following the year long, high profile investigation into FX rate manipulation which resulted in 6 major FX dealers, which were global banks, being fined $4.3 billion by Swiss, British and US authorities.
Stuart Gulliver, HSBC’s CEO, admitted the results were disappointing. The bank, which is embroiled in a scandal about the tax avoiding strategies of its Swiss banking arm, said profits fell because of weakness in the investment banking arm and $3.7bn (£2.4bn) in regulatory fines and other conduct issues, such as compensation for mis-selling payment protection insurance.
Chart courtesy of Google Finance