HSBC shares leap despite worries over risks in US

THE Western world’s largest bank is fighting to appease US regulators amid a profits slump.

HSBC was ordered to improve its monitoring of suspicious activity and checks on customers in a 2010 demand from the American Office of the Currency Comptroller.

But the lender was yesterday forced to admit its American business was not up to the necessary standard. It said it was working on a fix.

However, despite a 29pc fall in first half profits, shares rose 4.5pc thanks to a £1.9bn buyback announcement and a quarterly dividend of 10 US cents per share – in line with last year, taking the total so far to $0.20. The total dividend for the year is expected to be $0.51, a yield of about 7.6pc.

HSBC has faced a host of scandals since the financial crisis, including revelations that its accounts were used for tax evasion in Switzerland and money laundering by drug lords in Mexico. The latter led to a £1.2bn fine in 2012.

The lender also said law enforcers had asked it to provide information on dealings with Panamanian law firm Mossack Fonseca. Earlier this year, leaked documents revealed HSBC and affiliates used the business to set up 2,300 companies for clients.

It was suggested Mossack was helping thousands of wealthy customers avoid paying taxes.

HSBC’s profits fell 29pc to £7.3bn amid turmoil on global markets. Last year it announced it would axe 25,000 roles and is increasingly focused on Asia, although it has pledged to keep its head office in London.

Investors responded well to the unexpected £1.9bn share buyback after the sale of HSBC’s Brazilian business.

This will reduce the number of shares in circulation and ease pressure on dividends. Shares rose 4.5pc, or 21.6p, to 504.4p.

Traders also cheered figures from Standard Chartered, which announced a £670.5m profit in the first half of 2016. This was 57.4pc down on a year earlier but a huge improvement on the £2.7bn it lost in the last six months of 2015.