HSBC Holdings Plc, which is under investigation by U.S. regulators for laundering funds of sanctioned nations including Iran and Sudan, is in talks to settle the matter, two people with knowledge of the case said.
The bank, Europe’s largest by market value, made a $700 million provision in July for any U.S. fines after a Senate Committee found it had given terrorists and drug cartels access to the U.S. financial system. That sum might increase, Chief Executive Officer Stuart Gulliver has said.
An HSBC settlement regulators and the Manhattan District Attorney were aiming to conclude as early as September may have been slowed when New York’s banking superintendent accused Standard Chartered of laundering $250 billion for Iran. Regulators had been talking with both banks about universal accords when Benjamin Lawsky on Aug. 6 threatened to revoke Standard Chartered’s license. Deals with the London-based banks next month are still possible, said the people, who asked not to be identified because the investigations are confidential.
“This is an epidemic of banks willfully, consistently violating economic sanctions,” Jimmy Gurule, a former undersecretary for enforcement at the U.S. Treasury, said of sanctioned-nation money laundering. “It calls for more serious sanctions than a monetary fine for an individual bank that does nothing more than harm shareholders.”
HSBC’s $700 million set-aside, if paid, would constitute the largest U.S. settlement reached over such allegations, topping the $619 million in penalties and forfeitures paid in June by ING Groep NV, the biggest Dutch financial-services company. Standard Chartered agreed on Aug. 14 to pay $340 million to settle the New York state matter, an accord that broke a previous pattern of resolving all such U.S. probes at once in a unified agreement.
HSBC’s credit-rating outlook was cut yesterday by Standard & Poor’s, which questioned whether the lender is too big to be managed effectively in the wake of money-laundering investigations. S&P reduced its outlook on HSBC’s long-term rating to negative from stable.
HSBC fell 1.4 percent to 551.20 pence at 1:53 p.m. in London trading.
HSBC, Standard Chartered and other European banks have been under investigation by U.S. regulators that include the Treasury Department’s Office of Foreign Assets Control, the Federal Reserve and Manhattan District Attorney Cyrus Vance Jr.