HSBC Holdings Plc has set aside $550 million more to cover potential fines for alleged manipulation of foreign exchange markets and warned it could face a $500 million bill to compensate U.S. customers sold debt protection products.
HSBC said in its annual report on Monday it had paid restitution to some U.S. customers in connection to debt protection and other products offered before May 2012.
It said additional remediation for this issue "may lie in a range from zero to an amount up to $500 million."
HSBC paid $611 million to U.S. and UK authorities in November when it was one of six banks fined for alleged manipulation of FX markets.
U.S., UK and other authorities are still investigating the issue and the bank had $550 million provisioned at the end of December, its annual report said.
At the same time, HSBC Holdings Plc Chief Executive Officer Stuart Gulliver, is facing calls to break up Europe’s largest bank after saying profitability will be lower.
Gulliver, up against rising capital demands and a sluggish global economy, is also struggling to contain a tax-evasion scandal at HSBC’s private bank that he said brought “shame” to the company, reported 2014 earnings that missed analysts’ estimates, and drove the stock down almost 5 percent. The CEO said parts of the investment bank and some national divisions don’t offer sufficient returns and may face “extreme solutions.”
On Monday, he cited Brazil, Mexico, Turkey and the U.S. as potential markets for disposals, among 74 countries where HSBC operates. The bank has more than 250,000 staff, even after exiting 77 businesses and cutting some 50,000 jobs in Gulliver’s four-year tenure. HSBC is the largest European bank by market value.