HSBC was among the biggest fallers on the FTSE 100 this morning, with shares down almost 2%, after the bank revealed it will take a $1.1bn provision in its upcoming third-quarter results, due tomorrow.
The provision follows the loss of part of an appeal in a long-running legal case relating to Bernard Madoff’s Ponzi scheme. HSBC had acted as a service provider to funds that invested with Bernard L. Madoff Investment Securities, and was sued in 2009 by the Herald Fund, which sought restitution for assets lost in the fraud.
Last Friday, the Luxembourg Court of Cassation rejected HSBC Luxembourg’s appeal over the restitution of certain securities, though it accepted the bank’s appeal on a separate cash claim.
HSBC said it plans to lodge a second appeal with the Luxembourg Court of Appeal and noted that the final financial impact may differ significantly from the current provision.
