HSBC To Book $1.1 Bln Provision After Luxembourg Ruling In Herald Fund Case Tied To Madoff Fraud

HSBC Holdings

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(RTTNews) - HSBC Holdings plc (HSBC, HSBA.L,HBC1.DE,HSHD.SI, 0005.HK) announced that it will recognize a provision of US$1.1 billion in its consolidated financial results for the third quarter of 2025, following a recent ruling in the long-running Herald Fund SPC litigation related to the Bernard L. Madoff Investment Securities LLC fraud.

The provision is expected to impact the Group's CET1 capital ratio by approximately 15 basis points and will be classified as a material notable item. HSBC confirmed that this will not affect its fiscal year 2025 return on tangible equity (RoTE) excluding notable items, nor its dividend plans.

The litigation stems from a 2009 lawsuit in Luxembourg, where HSBC Securities Services Luxembourg (HSSL) is defending against claims by Herald Fund SPC for restitution of securities and cash. On 24 October 2025, the Luxembourg Court of Cassation denied HSSL's appeal concerning the securities claim but upheld its appeal regarding the cash claim. HSSL now intends to pursue a second appeal before the Luxembourg Court of Appeal.

Should HSSL be unsuccessful in the second appeal, it will challenge the quantum of any payment required in subsequent proceedings. HSBC noted that the final financial impact remains uncertain due to the complexities surrounding the case.

HSBC announced it will release its third-quarter results for fiscal year 2025 on 28 October 2025.