HSBC caught up in probe on manipulation of forex trading

A worldwide probe into suspected rigging of foreign exchange deals has reached Europe's biggest bank, HSBC.

A worldwide probe into suspected rigging of foreign exchange deals has reached Europe's biggest bank, HSBC.

The London-based bank said in its quarterly earnings statement on Monday that the British regulator, the Financial Conduct Authority, was conducting investigations alongside several other global agencies into a number of companies, including HSBC, "relating to trading on the foreign exchange market".

HSBC joins British banks Barclays and Royal Bank of Scotland in saying that they are part of the foreign exchange market investigations.

Deutsche Bank, UBS and US pair Citi and JPMorgan Chase have also said they are co-operating with regulators over the affair.

Barclays has reportedly suspended six traders while it investigates manipulation of foreign exchange markets and RBS has suspended two.

The banking sector has already been shaken by a rigging scandal related to the Libor, a benchmark interest rate for lending between banks that also determines numerous financial and interest rate contracts around the world.

That scandal has resulted in more than $US3.5 billion in settlements with financial institutions, as well as ongoing criminal prosecutions of several traders involved.

HSBC added that it was "co-operating with the investigations which are at an early stage".

It comes as the British bank announced a 28 per cent increase in net profit to $US3.2 billion in the three months to the end of September on major cost-cutting and lower bad debt charges.

"Revenue was stable in the third quarter, influenced by the mixed global macro-economic picture," HSBC chief executive Stuart Gulliver said.

"Our home markets of the UK and Hong Kong contributed more than half of the group's underlying profit before tax."

Mr Gulliver added: "Hong Kong continues to benefit from its close economic relationship with mainland China. We remain well positioned to capitalise on improving economic conditions in these markets."

HSBC said it would continue to focus on reducing its cost base after savings of $US400 million over the third quarter and total cuts since the start of 2011 of $4.5 billion. "This is well in excess of the target we set out to achieve by the end of 2013. We reinvested part of these savings in risk and compliance, increasing headcount by 1600 since December 2012," Gulliver said.

Headquartered in London, HSBC was founded in Hong Kong and sees Asia as its main market. It has slashed costs by billions of dollars and axed tens of thousands of jobs since 2011 under a massive restructuring of the group.

The bank added on Monday that its pre-tax profits rallied 30 per cent to $US4.53 billion in the third quarter compared with the same period last year.

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