HSBC sets aside US$1.3b for currency-manipulation penalties

HSBC Holdings Plc set aside US$1.3 billion to cover the cost of settling claims it was involved in the manipulation of benchmark foreign-exchange rates. 

PHOTO: REUTERS

AUG 3, 20156:33 PM

[LONDON] HSBC Holdings Plc set aside US$1.3 billion to cover the cost of settling claims it was involved in the manipulation of benchmark foreign-exchange rates.

"Investigations into HSBC by the Department of Justice, Federal Reserve Bank, and other authorities around the world continue," HSBC said in a statement Monday. "There are many factors that may affect the range of outcomes, and the resulting financial impact of these matters. Due to uncertainties and limitations of these estimates, the ultimate penalties could differ significantly."

HSBC paid about US$618 million to two regulators in the first round of settlements in the currency manipulation probe in November. The lender wasn't among the group of banks that six months later paid a further US$5.8 billion in penalties and pleaded guilty to reach a settlement with the US Justice Department.

So far, the penalties levied by global regulators in the foreign-exchange rigging probe have surpassed US$10 billion. The fines levied by the Justice Department have varied widely: UBS Group AG paid about US$203 million while Citicorp parent Citigroup Inc paid US$925 million.

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Citigroup under investigation over student-loan servicing

Citigroup Inc is being investigated over its student-loan servicing practices in a probe that the bank said echoes an enforcement action against at least one other institution. 

PHOTO: BLOOMBERG

AUG 3, 20159:48 PM

[NEW YORK] Citigroup Inc is being investigated over its student-loan servicing practices in a probe that the bank said echoes an enforcement action against at least one other institution.

Citigroup, which didn't disclose which regulatory agency is involved, is cooperating with the probe, the New York-based firm said Monday in a filing. The investigation may result in penalties or having the bank offer restitution to customers, Citigroup said.

Jennifer Lowney, a Citigroup spokeswoman, declined to comment beyond the filing. The bank didn't disclose the other firm it cited.

The US Consumer Financial Protection Bureau last year was involved in a similar investigation into Discover Financial Services. The Riverwoods, Illinois-based company disclosed the probe in February 2014 and last month agreed to refund US$16 million to consumers and pay a US$2.5 million penalty. The CFPB found the firm overstated minimum amounts due on billing statements and denied consumers information needed to obtain income-tax benefits.

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Citigroup exited most of its student-loan business in September 2010 when the bank sold its majority stake in Student Loan Corp to Discover, unloading US$4.2 billion of private loans and US$3.4 billion of securitized loans. SLC separately agreed to sell US$28 billion of securitized federal student loans and related assets to SLM Corp, known as Sallie Mae. At the time, the bank said it would keep US$8.7 billion of federal and private loans and look to sell those over time.

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Ex-UBS, Citigroup trader convicted in UK of Libor rigging

A trader who worked for UBS and Citigroup on Monday became the first person to be convicted by a jury in Britain of rigging the benchmark Libor inter-bank lending rate. 

PHOTO: AFP

AUG 3, 201510:17 PM

[LONDON] A trader who worked for UBS and Citigroup on Monday became the first person to be convicted by a jury in Britain of rigging the benchmark Libor inter-bank lending rate.

Tom Hayes, 35, was found guilty following a trial at London's Southwark Crown Court.

Hayes had denied eight counts of conspiracy to defraud between 2006 and 2010, when he worked for Swiss bank UBS and its US rival Citigroup.

Britain's Serious Fraud Office (SFO) alleged he was the leader of more than a dozen traders who worked to rig the London Interbank Offered Rate (Libor).

Libor, an estimate of the average interest rate for banks borrowing from other banks, is a key reference for many financial products around the world, from consumer loans to savings accounts.

AFP

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