HSBC boosts reserves for litigation expenses

Tools

Not too long ago, the big question about big U.S. banks was whether they had adequately reserved against the many lawsuits and enforcement actions that were aimed at them.

Now the same question is being asked of British banks, such as Barclays and HSBC. The latter has been in the spotlight for a host of dubious activities. The latest news is that regulators are actively looking into claims that laws might have been violated in its offshore center on the Channel Island of Jersey

A whistleblower "secretly provided a detailed list of names, addresses and account balances earlier this week, according to The Telegraph. 

The paper says that, "among those identified on the list (of HSBC clients) are Daniel Bayes, a drug dealer who is now in Venezuela; Michael Lee, who was convicted of possessing more than 300 weapons at his house in Devon; three bankers facing major fraud allegations and a man once dubbed London's 'number two computer crook'. A series of other accounts containing six-figure deposits are also registered to modest addresses in relatively poor parts of the country."

This comes on top of the bank's statement that expects a criminal indictment for various alleged AML lapses. On top of that, the Libor probe must still be resolved, and officials are looking into Iranian business dealings. The bank added $800 million in reserves recently, bringing its total reserves to $1.5 billion.

At this point, even the bank is warning that more reserve additions will likely be necessary. 

For more:
- here's the article

Related article:
HSBC's legal liability set to soar