{"id":1981,"date":"2025-10-27T02:00:46","date_gmt":"2025-10-27T02:00:46","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/hsbc-to-recognize-1-1-billion-in-provision-after-court-ruling-in-madoff-case\/"},"modified":"2025-10-27T02:00:46","modified_gmt":"2025-10-27T02:00:46","slug":"hsbc-to-recognize-1-1-billion-in-provision-after-court-ruling-in-madoff-case","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/hsbc-to-recognize-1-1-billion-in-provision-after-court-ruling-in-madoff-case\/","title":{"rendered":"HSBC to recognize $1.1 billion in provision after court ruling in Madoff case"},"content":{"rendered":"\n
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A view of the logo of HSBC bank on a wall outside a branch in Mexico City, Mexico, on June 14, 2024.<\/p>\n

Henry Romero | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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HSBC said on Monday that it will recognize a provision of $1.1 billion in its third quarter results following a court ruling in Luxembourg related to the Bernard Madoff investment fraud case.<\/p>\n

Herald Fund SPC sued HSBC’s Luxembourg unit in 2009, claiming restitution of securities and cash it said were lost in the fraud.<\/p>\n

The court denied HSBC unit’s appeal in respect of Herald’s securities restitution claim, but accepted the unit’s appeal in respect of the cash restitution claim.<\/p>\n

The bank will now pursue a second appeal before the Luxembourg Court of Appeal, and added that if unsuccessful, it would contest the amount to be paid in subsequent proceedings.<\/p>\n

Madoff was described as the mastermind of the largest investment fraud in U.S., defrauding clients of as much as $65 billion. He pleaded guilty in 2009 to a scheme that started in the early 1970s, ripping off more than 40,000 people in 125 countries over four decades, before being caught on Dec. 11, 2008.<\/p>\n

Madoff’s victims included director Steven Spielberg and actor Kevin Bacon, besides scores of ordinary investors. Madoff was sentenced to 150 years in prison, and passed away in 2021.<\/p>\n

In its interim report for 2025 released in July, HSBC said Herald had claimed a restitution of securities and cash of $2.5 billion plus interest, or damages of $5.6 billion plus interest from HSBC.<\/p>\n

HSBC, Europe’s largest lender, said that various non-U.S. HSBC companies provided custodial, administration and similar services to a number of funds whose assets were invested with Bernard Madoff Investment Securities.<\/p>\n

The news comes a day before HSBC is due to announce its results, with the bank saying that the $1.1 billion provision will impact its Common Equity Tier 1, or CET1, ratio by about 15 basis points. The CET1 ratio is a measure of a bank’s financial strength, and is used to determine its ability to withstand distress.<\/p>\n

Estimates from analysts compiled by the bank on Oct. 17 had forecast CET1 ratio for the third quarter to come in at 128.9, compared to 128.2 in the second quarter.<\/p>\n

HSBC, which said that the final financial impact could be “significantly different,” given the pending appeals, is currently undergoing a restructuring under CEO Georges Elhedery, and will see the bank split its operations into four divisions.<\/p>\n

The bank has said the reorganization will cut costs by about\u00a0$300 million this year, creating separate “Eastern markets” and “Western markets” sectors.<\/p>\n

\u2014 CNBC’s Marty Steinberg and Scott Cohn contributed to this report.<\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A view of the logo of HSBC bank on a wall outside a branch in Mexico City, Mexico, on June 14, 2024. Henry Romero | Reuters HSBC said on Monday that it will recognize a provision of $1.1 billion in its third quarter results following a court ruling in Luxembourg related to the Bernard Madoff […]<\/p>\n","protected":false},"author":1,"featured_media":1982,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[343,1541,1314,1960,1964,1962,1961,1963],"class_list":["post-1981","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-billion","tag-case","tag-court","tag-hsbc","tag-madoff","tag-provision","tag-recognize","tag-ruling"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/1981","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=1981"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/1981\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/1982"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=1981"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=1981"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=1981"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}