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.

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