HSBC to Book Madoff-Linked Provision After Court Ruling
London-headquartered HSBC will book a significant provision from a Luxembourg court ruling on a long-running lawsuit related to the Bernard Madoff scandal.
HSBC will recognize a $1.1 billion provision in its third quarter results due to a Luxembourg court ruling related to the Bernard Madoff investment fraud, according to a filing.
In 2009, Herald Fund SPC sued HSBC’s Luxembourg unit for restitution of assets it said were lost in the fraud with the British lender acting as a service provider to several funds that invested with Bernard L. Madoff Investment Securities LLC.
On 24 October 2025, a Luxembourg court denied an appeal by HSBC Securities Services Luxembourg (HSSL) over the restitution of securities but accepted its appeal on a separate cash restitution claim. HSSL will pursue a second appeal and if unsuccessful, it will contest the amount to be paid in subsequent proceedings.
The latest provision is estimated to have an impact of around a 15 basis points on HSBC’s common equity tier 1 (CET1) capital ratio with no effect on the annual return on return on tangible equity excluding notable items nor dividend payouts.
