Swiss Bank Woes Continue For HSBC Holdings plc (ADR) (HSBC)
Profits at HSBC Holdings plc (ADR) (NYSE:HSBC) nosedived in 2014 and the company blamed a number of adverse developments in the year that hit its balance sheet. Analysts have cited that the issue of poor performance would put investors off more than the conduct issues that have gained significant press coverage recently. The Swiss bank has allocated some funds to cover more fines in connection to the forex rigging claims.
Profit down 17%
HSBC Holdings plc (ADR) (NYSE:HSBC) said its 2014 profit plunged 17% to 12.14 billion pounds from 14.66 billion pounds in the prior year. The management cited that the bank was hit by various items that adversely impacted the balance sheet. Some of the issues that affected the bank included the loss of customers, settlements and some other fines.
The bank has set aside 358 million pounds to cover fines related to the forex exchange rigging claims because investigations on the matter are still in progress. HSBC also cited that the cost of compensating the U.S. victims of sour debt products that it sold could rise to over 325 million pounds.
According to analysts, as much as the conduct issues around the bank could affect investor sentiments, the greatest issue likely to turn off investors is poor performance. HSBC Holdings plc (ADR) (NYSE:HSBC)’s performance in the global banking, market revenue and forex exchange earnings failed to live up to the expectations in the fourth quarter.
HSBC Holdings plc (ADR) (NYSE:HSBC) has been the subject of embarrassing revelations including one that involves its CEO, Stuart Gulliver. Details emerged that Gulliver stashed 5 million pounds of his own cash at a Panamanian company that operates a private account with HSBC.
Customers down 70%
The various conduct issues that surround HSBC Holdings plc (ADR) (NYSE:HSBC) have not been good for the bank. In the 2014 performance results statement, it emerged that customers at HSBC’s private bank had declined by about 70%, although the bank has been remodeling its private operation. At some point, HSBC sold a customer portfolio in the private bank to LGT Bank, a move that also reduced revenue in the segment.
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