HSBC to Book $1.1B Madoff-Related Provision

HSBC said it will book a $1.1 billion provision in its third-quarter 2025 results after Luxembourg’s Court of Cassation partially rejected its appeal in a long-running Herald Fund SPC lawsuit tied to Bernard Madoff’s Ponzi fraud. The court denied HSBC’s appeal on Herald’s securities restitution claim but upheld Herald’s cash restitution claim; HSBC said it will pursue a second appeal to the Luxembourg Court of Appeal and, if unsuccessful, contest the amount to be paid. Herald, in liquidation, has sought restitution of securities and cash of about $2.5 billion (or damages of $5.6 billion), alleging HSBC’s Luxembourg unit failed in custodial and administrative duties to protect assets invested with Madoff’s firm. HSBC estimated the $1.1 billion provision would reduce its common equity tier 1 ratio by roughly 15 basis points and warned the eventual financial impact could differ significantly. The announcement knocked HSBC shares down about 1%.