Dec. 11 - HSBC agrees to pay $1.92 billion to settle a U.S. criminal probe into money-laundering lapses at the British lender, the largest penalty ever paid by a bank. Ciara Sutton reports.
Laundering drug money and illicit fund transfers to Iran - not the sort of deals usually associated with HSBC. But the UK bank has been fined nearly 2 billion dollars by US authorities with further fines expected in the UK. It's the largest penalty ever paid by a bank. But HSBC had already set aside $1.5 billion to cover the fines, and with share prices rising slightly in morning trade, investors appear unrattled by the latest scandal. Banking analyst Chris Wheeler from Mediobanca says that's because their misdemeanours aren't considered as bad as they sound. (SOUNDBITE) (ENGLISH) BANKING ANALYST AT MEDIOBANCA, CHRIS WHEELER, SAYING: "This is not very very well paid investment bankers trying to make even more money by manipulating the market. This is about the fact that proper procedures weren't followed and it's partly due to the scale of activity pre-prices. So what the banks put in place now is something that stops those clerical errors." But it's the third time in a decade HSBC has been penalized for lax controls. And IG Markets' David Jones says the bank's reputation may take some time to recover. (SOUNDBITE) (English) CHIEF MARKET STRATEGIST AT IG, DAVID JONES, SAYING: "For banks to get money laundering rules wrong or not pay the right amount of attention to them, in this day and age is a serious blow for them. They have said, we are going to tighten this up, and so far investors seem to be happy but it is yet another scandal in a long list of scandals we've had with the banks this year. It doesn't help the reputation of the sector as a whole when it's seen to be making what are fairly basic mistakes." HSBC says it has increased spending on anti-money laundering systems and is reviewing its customers across the globe - at a cost of around 700 million dollars. But the settlement has put the industry back in the spotlight for the wrong reasons. On Monday HSBC's British rival Standard Chartered was fined for sanctions violations - it took a hit of over 300 million dollars. And Credit Suisse, Lloyds and Barclays have all been fined under similar circumstances. Many are now wondering what's the next scandal to hit an increasingly damaged industry.