HSBC interim management statement shows $378 million set aside to appease the FCA

As the likelihood of Britain’s Financial Conduct Authority (FCA) deeming that settlements from some of the largest FX dealers in the banking sector will have to be paid to address allegations of FX rate manipulation, HSBC has stated that it has set aside $378 million in order to pay for administration costs and a potential fine related to allegations that bankers sought to manipulate key currency markets.

Fortunes have dipped among trading desks within some of London’s FX order flow mainstays, with the having detailed in its interim management statement for the third quarter of this financial year that it is currently in discussion with the UK’s Financial Conduct Authority (FCA) over settling allegations over FX fixing alongside reporting a 12% slump in earnings.

This amount represents the exact sum set for provision by HSBC, following a report by LeapRate last week which detailed the combined £1 billion that three of Britain’s major banking institutions had set aside for possible settlement. These particular conglomerates, which are HSBC, RBS and Barclays are party to a substantial percentage of global FX order flow.

Such a course of action adds further substance to the notion that Britain’s regulators are more inclined to close cases, even of this magnitude, upon reaching a fiscal settlement with firms accused of malpractice, as opposed to their transatlantic counterparts which seek to conclude lawsuits and sanctions, as well as disbursements, restitutions and possible criminal charges against any purpetrators. In the long standing and high profile investigation into the activities of global banks with regard to possible manipulation of FX rates, this is evident, as the US instructed the Federal Bureau of Investigations (FBI) to consider this a criminal investigation over a year ago.

According to a report today by the International Business Times, HSBC’s official statement is that “Discussions are ongoing with the UK FCA regarding a proposed resolution of their foreign exchange investigation with respect to HSBC Bank’s systems and controls relating to one part of its spot FX trading business in London.”

“Although there can be no certainty that a resolution will be agreed, if one is reached, the resolution is likely to involve the payment of a significant financial penalty.

“We continue to cooperate fully with regulatory and law enforcement authorities in the UK and other jurisdictions” concluded the statement.

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