HSBC to pay $136 million in currency rigging settlement

HSBC has settled a US Department of Justice probe into currency rigging. Photo / AP

HSBC has agreed to pay just over US$100 million ($136.9m) in penalties to settle a US Department of Justice probe into currency rigging.

The payment comprises of US$38.4m in restitution and a US$63.1m fine, with the latter reflecting a 15 per cent reduction "in recognition of HSBC's cooperation during the investigation and its extensive remediation".

HSBC said it had entered into a three-year deferred prosecution agreement (DPA), under which it would cooperate fully with regulatory and domestic and foreign law enforcement authorities in any investigations against itself or current and former employees, according to the Daily Telegraph.

The London-listed bank said it would also take "additional steps" to bolster its compliance programme and internal controls.

The DPA, which was filed in the US today and which still needs to be approved by a judge, means HSBC would be able to avoid criminal charges as long as it fully complies with the agreement.

However, it comes just weeks after HSBC was released from an earlier five-year DPA, for lapses in anti-money laundering controls in relation to Mexican drug cartels, for which it paid a US$1.9 billion fine.

HSBC said the conduct which led the Department of Justice to issue this second DPA took place between 2010 and 2011 and, according to the document, relates to its handling of a client order by Cairn Energy and financial services it provided to another unnamed company.

The Cairn Energy case included Mark Johnson who, in October, was found guilty of defrauding Cairn over a £3.5b ($6.6b) client order. A jury ruled that he had driven up the value of the pound against the dollar by buying sterling prior to the transaction in order to make a bigger profit for HSBC.

Johnson, who was the first banker to be tried in the US since the foreign exchange rigging scandal, has not yet been sentenced.

HSBC's US$101.5m in penalties comes more than two years after nine banks agreed to pay a total $2bn in settlements after admitting to currency rigging.

A spokesman for HSBC said: "HSBC is committed to ensuring fair outcomes for its customers and protecting the orderly and transparent operation of the markets."