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* HSBC's FX charge at lower end of scale compared toBarclays, RBS
* FX charge related to UK regulator, US also investigating
* Statutory pre-tax profit rose 2 pct vs forecast 16 pctrise
* Adjusted revenues flat in Q3, provisions for bad debtshalve (Recasts with more detail, finance director, analyst comment,updates shares)
By Steve Slater and Matt Scuffham
LONDON, Nov 3 (Reuters) - HSBC Holdings has setaside $378 million for a potential settlement with Britain'sfinancial watchdog for alleged manipulation of currency marketsas the bank reported a 12 percent fall in underlying profit inthe third quarter.
Europe's largest bank by market value provided $1.8 billionin total in the quarter for fines, settlements and compensationcosts related to mis-selling loan insurance.
HSBC's provision for the forex investigation was lower thanthe 500 million pounds (800.15 million US dollar) set aside byBarclays and 400 million pound provision by Royal Bankof Scotland.
The bank said on Monday the British regulator had proposed aresolution of its investigation into alleged manipulation in the$5.3 trillion-a-day global forex markets. HSBC is one of sixbanks in talks with the regulator to pay about 1.5 billionpounds in a group settlement, sources have said.
Banks in Europe and the United States have recently setaside as much as $6.9 billion for possible forex settlements.
The banking industry has already paid out billions ofdollars to settle investigations across a range of activities,including mortgages and benchmark interest rates as authoritieshave tried to crack down on the excesses that led to thefinancial crisis.
The forex manipulation, revealed after banks were alreadyunder scrutiny for profiteering in the setting of benchmarklending rates, relates to daily fixing rates which traders arealleged to have manipulated.
HSBC's results showed underlying profit was $4.4 billion.The underlying profit strips out price moves in the bank's owndebt and adjusts for businesses sold or bought.
On a statutory basis, analysts had been expecting pretaxprofits to climb 16 percent in the quarter compared with lastyear but they rose just 2 percent to $4.6 billion.
"If you strip out the regulatory provisions it's a strongoperating quarter - unfortunately you can't strip out theprovisions," Richard Hunter, head of equities at HargreavesLansdown, said.
HSBC's shares fell 3 percent when the results were firstannounced but were down 0.3 percent at 637 pence by mid-morning.
"The results are OK, but I wouldn't want to buy them atthese levels," Beaufort Securities sales trader Basil Petridessaid. I'd rather buy HSBC shares around the 600 pence level.There are still too many ongoing regulatory issues with them,"
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U.S. authorities are also examining the alleged rigging offoreign exchange benchmarks and any settlement there is likelyto be more costly. The U.S. Department of Justice has shown ithas the power and willingness to push through multi-billiondollar fines on banks for misconduct.
HSBC said the British regulator was the only authority itwas holding "detailed" settlement discussions with.
"At the moment the only detailed settlement discussions inwhich we are involved is with the FCA," Iain Mackay, HSBCfinance director said, referring to Britain's Financial ConductAuthority.
"There are a number of other jurisdictions that haveexpressed interest in this topic and we are working closely withauthorities in each of those to work through those issues."
Estimates on how much banks could pay out in total in theforex probe vary wildly. Earlier this year, banking researchfirm Autonomous put the worldwide total at around $35 billion,which would dwarf the $6 billion paid by 10 financial firms tosettle an international investigation into the manipulation ofbenchmark interest rates.
HSBC also said it had been summoned to appear before Frenchmagistrates over whether its Swiss private bank had helpedFrench citizens to evade tax.
The $1.8 billion HSBC has set aside includes $701 million tocompensate British customers who were mis-sold products and a$550 million settlement with a U.S. government agency overallegations the bank mis-sold mortgage-backed securities.
HSBC's adjusted revenues in the third-quarter were flat at$15.6 billion.
Unlike Asian-focused rival Standard Chartered, whichreported a surge in its bad debts in the third quarter, largelydue to weak commodity markets, HSBC's loan impairment chargesmore than halved to $760 million compared to the same period ayear ago. (1 US dollar = 0.6249 British pound) (Additional reporting by Tricia Wright and Sudip Kargupta.Writing by Carmel Crimmins. Editing by Jane Merriman)
