HSBC Holdings PLC (NYSE:HSBC) reported today its financial performance for Q3 2014, revealing that the bank has made provision of $378 million in anticipation of legal fines which may come out of the forex manipulation investigation.
In addition to the forex investigation prohibition the global banking group has set aside a total of $1.7 billion for various legal and regulatory penalties it might face hurting its bottom line for the third-quarter of 2014. HSBC’s results showed an underlying profit of $4.4 billion in Q3, a 12% drop from the previous quarter.
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The share price of HSBC dropped following the announcement despite the fact that the forex provision was lower than the £400 million analysts expected. The sum was also the lowest provision announced so far by a major bank in relation to the forex investigation, compared for example, with Barclays’ £500 million provision.
The forex manipulation investigations are ongoing worldwide, led by various criminal and regulatory bodies, but HSBC has indicated that the British Financial Conduct Authority (FCA) was the only authority it was in serious discussions with. Iain Mackay, HSBC finance director said: “At the moment the only detailed settlement discussions in which we are involved is with the FCA. There are a number of other jurisdictions that have expressed interest in this topic and we are working closely with authorities in each of those to work through those issues.”