The vast $4.3 billion in fines which were administered by Swiss, British and American regulatory authorities to six banks in November last year for their part in the manipulation of FX benchmarks appears to not be the final chapter in the fiscal penalties.
Since November, which saw an end to the year-long regulatory probe into FX desks among the banks which handle the lion’s share of interbank FX order flow, the civil penalties have been completed and the criminal probes into the activities of individual traders began.
Now, just less than four months on, it is becoming clear that the financial penalties have not yet come to an end, as HSBC Holdings plc (LON:HSBA) has set aside $550 million more to cover potential fines for alleged manipulation of foreign exchange markets and warned it could face a $500 million bill to compensate U.S. customers sold debt protection products.
HSBC let its Head of FX Stuart Scott go in December, as culpability became the preserve of the senior executive under whose steerage benchmark rigging was a prominent practice.
In HSBC’s annual report, which was issued today, the financial giant stated “The remaining investigations and reviews in the UK, the US and elsewhere are ongoing. Based on the facts currently known there is a high degree of uncertainty as to the terms on which they will be resolved and the timing of such resolutions, including the amounts of fines and/or penalties, which could be significant. As at 31 December 2014, HSBC has recognised a
provision in the amount of US$550m in respect of these matters.”
Should the authorities conclude that the bank is liable for resolving further FX manipulation claims, this $550 million would represent almost the same figure as the bank was fined in November when the high-profile investigations against the six banks involved in the FX rate manipulation case was concluded by international regulators. At that time, HSBC paid $611 million from the $4.3 million collective fines.