HSBC Holdings Plc, the British bank accused of laundering money for Mexican drug lords, apologized to investors for compliance failings as it set aside $2 billion more to cover the costs of regulatory fines and lawsuits.
The lender made a $1.3 billion provision in the first half to compensate British clients wrongly sold payment-protection insurance and derivatives, HSBC said in a statement today as it posted an 8.3 percent drop in net income. It also made a $700 million provision for U.S. fines after a Senate committee found the bank gave terrorists, drug cartels and criminals access to the U.S. financial system, a sum Chief Executive Officer Stuart Gulliver said may increase.
Pretax profit at HSBC’s investment bank, overseen by Samir Assaf, increased to $5.05 billion from $4.81 billion. Wall Street’s five biggest banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., posted the lowest first-half revenue since 2008 in the first half of 2012 as trading and deal-making dried up.