November 22, 2024

DealBook: HSBC’s Profit Fell 17% in 2012 on Money Laundering Fine

A branch of HSBC in London. Britain's tax authority is investigating more than 4,000 accounts in the British crown dependency of Jersey.Andy Rain/European Pressphoto AgencyA branch of HSBC in London. Britain’s tax authority is investigating more than 4,000 accounts in the British crown dependency of Jersey.

LONDON – HSBC, Britain’s biggest bank, said on Monday that net profit fell 17 percent last year because of a record fine to settle money laundering charges and changes related to the value of its own debt.

Profit fell to $13.5 billion from $16.2 billion in 2011, failing to meet analysts’ expectations. The bank also missed its own target of return on equity of 12 to 15 percent. Its shares fell 2.6 percent in early trading in London on Monday.

Douglas J. Flint, HSBC’s chairman, said in a statement that last year was “a difficult one for all at HSBC as we addressed the restructuring of the firm against a lower-growth economic backdrop and with legacy issues and regulatory challenges imposing a further set of imperatives.”

The bank’s chief executive, Stuart T. Gulliver, added that he expected the market environment to remain “difficult,” but that HSBC would benefit from growth of the economies in China and the United States even if European markets continued to struggle.

To fulfill his pledge to increase profitability, Mr. Gulliver took the bank out of some markets, sold business divisions and eliminated jobs. HSBC has closed or sold 46 businesses and investments since 2011, including four this year. The bank sold its stake in Ping An Insurance of China for $9.4 billion and offloaded its credit card unit in the United States to Capital One Financial for $2.6 billion. HSBC also sold its unit in Panama to Bancolombia for $2.1 billion last month.

In December, HSBC agreed to a record $1.92 billion fine to settle charges with American authorities that the bank breached rules against money laundering, including that it handled money transfers worth billions of dollars for countries under United States sanctions.

HSBC, based in London, generates more than half of its profit in Asia. Growth in China has helped the bank compensate for shrinking or slower-growing income in Europe since the beginning of the financial crisis. Europe was the only region where HSBC’s earnings declined last year.

The bank said it had made solid progress on gradually reducing the size of its consumer lending and mortgage portfolio in the United States. HSBC’s fastest-growing business last year was its retail banking and wealth management operation.

HSBC added that it planned to increase the first three interim dividends this year by 11 percent.

Article source: http://dealbook.nytimes.com/2013/03/04/hsbc-annual-profit-falls-on-money-laundering-charges/?partner=rss&emc=rss

Strauss-Kahn Is Indicted and Will Soon Leave Jail

Mr. Strauss-Kahn’s lawyers said in court that their client would put up $1 million cash bail and wear an ankle monitor. They also said that Mr. Strauss-Kahn would remain under 24-hour home confinement in the apartment recently rented by his wife, with an armed guard posted outside — presumably to ensure he stays inside. He also submitted a waiver of extradition, should the American authorities need to get him back from France.

The judge, Michael J. Obus of State Supreme Court in Manhattan, agreed to those conditions, also requiring $5 million bond to be posted. Mr. Strauss-Kahn was not expected to be released into home confinement until Friday, after the judge made the bail agreement final.

After setting Mr. Strauss-Kahn’s bail conditions, Justice Obus issued a stern warning.

“Mr. Strauss-Kahn, I assume you’re going to be posting this in due course,” he said. “You will be subject to and you will have the benefit of the protection of the criminal court system, the criminal justice system of this state and this country. I expect you will be here.”

If there is the “slightest problem with your compliance,” Justice Obus added, he could change the conditions of the bail and even withdraw it.

Before the judge gave his decision, prosecutors announced that a grand jury had indicted Mr. Strauss-Kahn, who has been in protective custody on Rikers Island since Monday, on charges that he sexually assaulted a hotel housekeeper at the Sofitel New York.

The charges included several first-degree felony counts, including committing a criminal sex act, attempted rape and sexual abuse; the most serious charges carry 25-year prison terms.

Mr. Strauss-Kahn is due back in court on June 6.

The courtroom fell silent as Mr. Strauss-Kahn was brought in at about 2:30 p.m., looking far better than he had in his previous court appearance. He wore a gray suit with a baby blue shirt and was clean-shaven. He gave a tight-lipped grin and nod to his wife, Anne Sinclair, and daughter, Camille Strauss-Kahn, who were sitting in the front row.

Ms. Sinclair walked into the courtroom clutching her daughter’s hand. She wore a gray dress with a dark blazer.

In a sign, perhaps, of the seriousness with which prosecutors are treating the case, Artie McConnell, the assistant district attorney assigned to it, was accompanied by Daniel R. Alonso, the chief assistant district attorney, and Lisa Friel, the chief of the office’s sex crimes unit.

Mr. McConnell affirmed the prosecution’s objection to bail being set. As he had argued during the Criminal Court arraignment on Monday, he said that the evidence against Mr. Strauss-Kahn was compelling and that he had the means to flee.

“He has the stature and the resources not to be a fugitive on the run,” Mr. McConnell said, but to “live a life of ease and comfort in parts of the world that are beyond” the jurisdiction of the court and the United States.

Suggesting that the defendant acted in a manner consistent with someone who had just committed a crime, Mr. McConnell said Mr. Strauss-Kahn’s exit from the hotel was “unusually hasty.”

The prosecutor added that Mr. Strauss-Kahn had “shown a propensity for impulsive criminal conduct.” Mr. Strauss-Kahn gently shook his head in response.

Mr. Strauss-Kahn’s lawyers argued that the proposed bail package was comprehensive enough to allow his release from Rikers. One of his lawyers, William W. Taylor III, said the defense had hired a security team that would provide video monitoring, an ankle bracelet to monitor his movements and an armed guard at the entrance and exit of the building.

“There is really nothing more restrictive that can be accomplished along these lines,” Mr. Taylor said in court, adding that his client was “an honorable man.”

Colin Moynihan and William K. Rashbaum contributed reporting.

This article has been revised to reflect the following correction:

Correction: May 19, 2011

Due to an editing error, the Web summary in an earlier version of this article referred incorrectly to the timing of the indictment. It was handed up on Thursday, not Friday.

Article source: http://www.nytimes.com/2011/05/20/nyregion/grand-jury-indicts-former-imf-chief.html?partner=rss&emc=rss