HSBC’s Swiss Private Bank Hit By Money Laundering Probe, Q2 Profit Slumps

HSBC said on Wednesday that local and French law enforcement agencies are investigating its Swiss private bank in connection with alleged money laundering offences.

In its interim report, the bank noted that the investigations are in the early stages and relate to two historical banking relationships. “Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any possible impact on HSBC, which could be significant,” the bank said in a statement.

Switzerland’s financial regulator, Finma, said last year that HSBC’s private bank had failed to vet high-risk accounts held by politically exposed individuals adequately. The regulator’s investigation uncovered over $300 million in illicit transactions that took place between 2002 and 2015.

Separately, the bank reported that its second-quarter profit declined by 29% to $6.3 billion, primarily due to impairment charges related to its stake in Bank of Communications in China, as well as other divestments.

Retail sentiment on Stocktwits about HSBC was ‘bearish’ at the time of writing.

HSBC Group CEO Georges Elhedery noted that structural challenges to the global economy have caused market volatility and uncertainty, citing “broad-based tariffs” and “fiscal vulnerabilities.”

“This is complicating the inflation and interest rate outlook, creating greater uncertainty. Even before tariffs take effect, trade disruptions are reshaping the economic landscape,” Elhedery said. However, the bank said that it was well-positioned to navigate the uncertainty.

“While we would expect the direct impact from tariffs to have a relatively modest impact on our revenue, the broader macroeconomic deterioration may see RoTE excluding notable items fall outside of our mid-teens targeted range in future years,” HSBC said.

The company’s push in China is still facing challenges amid persistent weakness in the world’s second-largest economy’s real estate market. Its expected credit losses rose by $900 million to $1.9 billion compared with the first half of 2024.

Europe’s largest bank has launched a $3 billion share buyback program. HSBC is also seeking a new chairman, following the departure of incumbent Mark Tucker in September.

HSBC’s U.S. shares have gained 33.3% this year.

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