Financial News

  • 2 September 2014, 7:46

HSBC Hit As Woodford Warns On Possible Fines

HSBC's share price has taken a hit after one of the country's most high profile fund managers sold his stake worth £64m.

Neil Woodford, who left Invesco Perpetual earlier this year to set up his own company, cited concerns over the potential impact on the company from several industry-wide investigations.

He said in a blog posting: "I am worried that the ongoing investigation into the historic manipulation of Libor and foreign exchange markets could expose HSBC to significant financial penalties.

"Not only are these potentially serious offences in the eyes of the regulator, but HSBC is very able to pay a substantial fine.

"The size of any potential fine is unquantifiable, so this represents an unquantifiable risk. Nevertheless, a substantial fine could hamper HSBC's ability to grow its dividend, in my view."

His CF Woodford Equity Income Fund had 2.68% of its £2.4bn of assets in HSBC shares at the end of July, according to the fund's factsheet.

HSBC shares fell on the FTSE 100 when news of the sale emerged.

The bank's costs for past mistakes have included $1.92bn (£1.2bn) in 2012 to settle a money-laundering probe by US authorities.

The investigation focused on the transfer of billions of dollars on behalf of nations such as Iran, and the movement of money through the US financial system from Mexican drug cartels.

Mr Woodford wrote in his blog that he was broadly supportive of HSBC in terms of its day-to-day business as many banks with a UK focus still had some way to go to repair their balance sheets in the wake of the financial crisis.

He said: "It is a conservatively-managed, well-capitalised business with a good spread of international assets.

"As Chief Executive, Stuart Gulliver has done a great job over the last four years, making a very complicated organisation much simpler to understand."

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