While the fine is the largest ever for money laundering violations, HSBC's share gains indicate some investors in the bank see the settlement as a positive. Still, HSBC faces a host of legal challenges, even after settling money laundering violations with U.S. authorities.
HSBC will also continue to improve its anti-money laundering compliance and, according to the settlement, the bank will have an independent monitor evaluate the implementation of new controls over a five year period.
On Tuesday, Bank of America Merrill Lynch analyst Michael Helsby highlighted that the settlement puts a floor on HSBC's exposure to anti money laundering violations, but noted litigation remains a risk for the bank.
"While the settlement with the US authorities may draw a line under these specific AML related issues, HSBC remains subject to a number of significant litigation Issues," wrote analyst Michael Helsby in the report, citing the bank's continued exposure to a $9 billion class action lawsuit related to Bernard Madoff's Ponzi scheme, Libor-related lawsuits, and a $3.5 billion claim tied to practices at its former U.S. lending arm Household, among others.Helsby gives the bank an underperform rating. Other European banking conglomerates have also come under scrutiny for violating anti-money laundering controls. On Monday, Standard Chartered (STAN) paid $327 million to federal and state authorities to settle allegations the bank transacted payments for restricted Iranian and Sudanese clients. In June, ING settled with U.S. authorities over restricted payments to Iran and Cuba for $619 million. Meanwhile, over a dozen global banks face regulatory fines related to the manipulation of short-term interest rates. In June, Barclays paid $450 million to settle a host of rate manipulation allegations with global regulators that signaled widespread fraud in the market. Follow @agara2004 -- Written by Antoine Gara in New York
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV