HSBC will be forced on Monday to set aside well over £500m to compensate victims of insurance mis-selling as the reputational crisis gripping the banking industry continues to deepen.
I have learned that the bank, which has in recent weeks been embroiled in a lurid money-laundering scandal in the US, will say in its half-year results that it has made a provision of well over £300m to settle payment protection insurance (PPI) claims.
It will also disclose that somewhere in the region of £200m is being made available to provide redress to businesses which were mis-sold interest rate swaps following last month’s industry-wide settlement with the Financial Services Authority (FSA).
It is conceivable that HSBC’s board will decide to adopt a similarly cautious approach to Lloyds Banking Group in relation to PPI mis-selling.
If that is the case, HSBC’s mis-selling bill for the second quarter of 2012 will reach as high as £700m.
HSBC is also likely to detail the anticipated cost of the US money-laundering case.
So far in 2012, Britain’s banks have set aside £2.25bn for mis-selling compensation, while Barclays has been fined £290m for its role in the international Libor-rigging scandal.
That activity cost the chairman, chief executive and chief operating officer their jobs, while the bank’s finance director is under investigation by the FSA over the disclosure of information about fundraisings in 2008 that allowed Barclays to avoid a taxpayer rescue.
HSBC declined to comment.
