HSBC Books $1.1B Provision After Luxembourg Court Madoff Ruling

HSBC will recognize a $1.1 billion provision in its third quarter 2025 financial results following a Luxembourg court ruling related to a long-running lawsuit tied to the Bernard Madoff fraud scandal. The lawsuit, initiated by Herald Fund SPC in 2009, seeks restitution of securities and cash lost due to the Madoff Ponzi scheme, with HSBC acting as a service provider to funds invested with Madoff. The Luxembourg Court of Cassation denied HSBC's appeal on the securities restitution claim but accepted its appeal on a separate cash restitution claim, prompting HSBC to pursue a second appeal. The provision will impact HSBC's common equity tier 1 (CET1) capital ratio by approximately 15 basis points but will not affect the full-year return on tangible equity excluding notable items or dividend payments. HSBC acknowledges that the eventual financial impact could differ significantly due to the ongoing legal complexities and the pending second appeal. The bank plans to announce its Q3 2025 results as scheduled, with the provision classified as a material notable item.