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Bond Market News
HSBC To Take $1.1bn Provision Hit in Madoff Case
October 28, 2025
HSBC said that it will take a $1.1bn provision in its Q3 results after losing part of an appeal in a long-running lawsuit linked to Bernard Madoff’s Ponzi scheme, the largest financial fraud, valued at ~$65bn, in history. The case stems from a 2009 lawsuit filed by Herald Fund SPC against HSBC’s Luxembourg unit, alleging the bank failed in its custodian duties to protect assets invested with Bernard L. Madoff Investment Securities LLC. The Luxembourg Court of Cassation rejected HSBC’s appeal concerning the restitution of securities claimed by Herald, though it upheld an appeal on a separate cash claim. HSBC plans to appeal further and may contest the final payment amount, noting that the ultimate financial impact could differ from its current estimate. The provision is expected to have a 15bp impact on the bank’s CET1 ratio of 14.6%, in addition to the 125bp impact from its recent $13.6bn acquisition of Hang Seng Bank. Analysts said the broader financial impact should be limited given the bank’s size and suspended share buybacks. In July, HSBC had mentioned that the Herald Fund, now in liquidation, is seeking restitution of up to $2.5bn in assets or $5.6bn in damages plus interest.
HSBC’s bonds traded stable with its 7.05% Perp at 104.2, yielding 5.98%
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