Neil Woodford, one of UK’s best-known fund managers, has sold all his shares in HSBC Holdings plc over fears that banks face “unquantifiable” fines from regulators, The Telegraph reported on Monday.
While HSBC remains a conservatively managed, well capitalized business, it warrants caution as the sector faces the risk of “fine inflation”, Woodford was quoted as saying.
The fund manager noted that regulators had been imposing huge fines on banks for past failings. The size of such fines seemed to be determined by banks’ “ability to pay” rather than the seriousness of their misconduct, he said.
“In recent weeks I have started to become more concerned about one particular risk: that of ‘fine inflation’ in the banking industry. I am worried that the ongoing investigation into the historic manipulation of Libor and foreign exchange markets could expose HSBC to significant financial penalties,” Woodford was quoted as saying.
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