HSBC says likely to see criminal charges on money laundering

Investment Bank

HSBC has set aside the fourth most among British banks hit by a rise in claims from customers claiming they were mis-sold the insurance. Barclays Plc last month set aside 700 million pounds ($1.1 billion) more for claims while Lloyds Banking Group Plc, Britain’s biggest mortgage lender, made an additional provision of 1 billion pounds, bringing the industry total to about 11 billion pounds.

HSBC said pretax profit at the global banking and markets business, its name for its securities unit, more than doubled to $2.25 billion from $1 billion.

The unit posted $4.32 billion of revenue, compared with $4.54 billion in the second quarter. That performance was “slightly disappointing,” said Cormac Leech, an analyst at Liberum Capital in London who estimated sales would be $4.5 billion.

Consumer, Asia

Securities firms in the U.S. and Europe have posted gains in revenue since European Central Bank President Mario Draghi’s July pledge to defend the euro with “whatever it takes” sparked a rally in bond markets. Deutsche Bank AG last week posted a third-quarter profit gain as revenue from trading bonds and other products jumped 67 percent. Goldman Sachs Group Inc.’s fixed-income, currencies and commodities revenue climbed 28 percent from a year earlier.

Pretax profit at the bank’s consumer unit rose to $1.5 billion from $224 million as loan impairments in the U.S. fell. At the commercial bank, profit rose 15 percent to $2.25 billion from $1.95 billion. In Europe, the bank posted a $217 million loss, compared with $2.96 billion in pretax profit for the year before, as the lender booked a charge of $1.4 billion on the value of its own debt.

In Asia excluding Hong Kong, profit fell 5.1 percent to $1.9 from $2 billion. In the U.S., loan impairments fell to $695 million from $2.39 billion after the lender disposed of its credit card business to Capital One Financial Corp., a deal it completed in May.

Third-quarter net income fell to $2.5 billion. That’s a 52 percent decline from the year earlier, when HSBC had gains from the revaluation of its own debt.

So-called credit valuation adjustments require banks to book losses when the value of their debt rises, and gains when it declines, on the theory that a loss, or profit, would be realized were the bank to repurchase that debt.

Bloomberg News

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