NEW YORK HSBC's (HSBA.L) North American chief executive expects the new U.S. financial reform law to cost it at least $110 million in annual revenue.
The company expects its biggest hit from the Dodd-Frank law to come from restrictions on fees HSBC receives for processing debit card transactions, and from what its North American CEO called "changes to FDIC levies." The law increased the fees that U.S. banks will pay the Federal Deposit Insurance Corp.
The sweeping law establishes a consumer protection agency, which could eventually deepen the cuts to HSBC's U.S. revenues, North American CEO Niall Booker told reporters on a conference call on Monday.
"We don't know what the impact of the new consumer protection agency will be, and exactly what tone and what action it will take, so that makes dealing with the cards business and to some extent the personal financial services business ... (and) trying to figure out what that would look like a bit more difficult," Booker said.
HSBC, Europe's biggest bank, reported half-year profits of $11.1 billion on Monday.
Other elements of the law may hit the bank too, Booker said. The $110 million estimate "doesn't factor in any changes that we might have to make to the global banking and markets platform - albeit those will be small - or the impact of any further activity by the consumer protection agency," he said.
The law's restrictions on proprietary trading "will have minimal" impact on HSBC, because its U.S. arm does not do much private equity or propriety trading business, Booker said.
(Reporting by Maria Aspan; Editing by Phil Berlowitz)