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Investing.com-- HSBC Holdings (HK:0005) (LON:HSBA) said on Monday it will take a $1.1 billion provision in its third-quarter results to cover potential costs linked to ongoing litigation tied to the Bernard Madoff investment fraud.
The charge relates to a 2009 lawsuit in Luxembourg, where HSBC Securities Services Luxembourg is defending claims from Herald Fund SPC seeking restitution of securities and cash.
The Luxembourg Court of Cassation last week denied HSBC’s appeal over the securities restitution claim but allowed its appeal over the cash element, the bank said in a statement.
HSBC said it will pursue a second appeal before the Luxembourg Court of Appeal and, if unsuccessful, will contest the payment amount in subsequent proceedings.
The provision is expected to have about a 15-basis-point impact on the bank’s common equity tier 1 capital ratio and will be recorded as a “material notable item,” not affecting its return on tangible equity excluding notable items or dividend guidance.
HSBC is scheduled to report its third-quarter earnings on Oct. 28.