HSBC boss 'sorry' for bank mistakes

HSBC boss Stuart Gulliver apologised for “the mistakes of the past” today as the banking giant set aside a further $1.5bn to cover the cost of mis-selling claims and a money-laundering scandal in the US.

The bank said it increased its provision to cover mis-sold payment protection insurance (PPI) by $537m in the three months to June, bringing the total charge to date to $1.7bn.

HSBC also took a $237m hit for mis-selling complex financial products known as interest-rate swaps to small businesses, while it has set aside $700m to deal with money-laundering penalties.

Mr Gulliver said: “We are profoundly sorry for our mistakes, and are committed to putting them right.”

The wave of provisions threatened to overshadow better-than-expected first-half results, which showed a 3% dip in underlying pre-tax profits to $10.6bn and a 3% rise in net operating income to $36.9bn.

Earlier this month, a Senate investigation revealed that HSBC had inadvertently allowed rogue states and drugs cartels to launder billions of pounds through its US arm.

The bank warned that the total amount of fines and penalties levelled against it could be “significantly higher” than the $700m set aside so far.

The findings, which accused HSBC of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria, led to the resignation of head of compliance David Bagley.

The revelations heaped pressure on Business Minister Lord Green, who was chairman of HSBC at the time the failings took place.

Mr Gulliver added: “It is right that we be held accountable and I apologise for our past shortcomings.”

He went on: “HSBC is now run and managed as a genuinely global firm, making it easier to set, monitor and enforce standards.”

The charge for interest rate swap mis-selling follows the findings of an investigation by UK regulators which were published at the same time that the Libor-fixing scandal emerged.

The complicated derivatives products may have been sold to businesses as protection – or to act as a hedge – against rising rates without the customer fully grasping the risks.

With regard to Libor, HSBC said it was co-operating with investigations and requests for information from authorities, but added that it was not “practicable at this time” to predict the resolution of the investigations.