THE HSBC bank has agreed to pay American authorities a record £1.2billion settlement over accusations it allowed rogue states and drug cartels to launder billions of pounds through its US division.

The US Senate findings against HSBC, which accused the bank of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria, led to the resignation of David Bagley, the bank's head of compliance.

The lender reached agreement with several US authorities, including the Department Of Justice, and expects to soon finalise a deal with the Financial Services Authority.

HSBC group chief executive Stuart Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

HSBC said the board had taken decisive action to direct management to "fix past shortcomings as they have come to light".

The settlement comes after fellow British bank Standard Chartered said it would pay a further £203million to settle allegations it breached sanctions with Iran.

The bank has already paid £211m to New York's Department Of Financial Services. It was accused by regulators in August of exposing America to terrorists and drug kingpins by hiding £160bn of transactions with Tehran.