HSBC has taken a $1.15 billion hit to cover a potential U.S. fine for lax anti-money laundering controls and to pay compensation for mis-selling products in Britain, eating into its quarterly profit.
While HSBC's earnings were helped by a sharp drop in bad debts, it set aside $800 million to cover a potential fine from U.S. regulators for breaches in anti-money laundering controls in Mexico, adding to $700 million put aside in July.
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HSBC, Europe's biggest bank, said on Monday no agreement had been reached with U.S. authorities and the final resolution will likely involve criminal as well as civil charges. It said there was a high degree of uncertainty estimating the final cost and it was possible the amount will be significantly higher.
The bank reported an underlying profit - after stripping out the impact of disposals and changes in the value of its own debt - in the July-September quarter of $5.0 billion, up from a revised $2.2 billion a year earlier.
HSBC took another $353 million charge for mis-selling in Britain, mainly for payment protection insurance.
Shares in HSBC were down 2.6 percent by 0832 GMT, the biggest faller in the FTSE 100 index and trailing a 1.4 percent fall in the European banking index.
(Reporting by Steve Slater and Matt Scuffham; Editing by Dan Lalor)