HSBC to pay out R10.3bn in US fine
Britain’s Asia-focused bank HSBC revealed on Monday a $765m (R10.26bn) US fine over the lender’s actions in the runup to the subprime crisis, as it also logged rising first-half profits.
HSBC said it has agreed to pay the large US penalty over its conduct in residential mortgage-backed securities (RMBS), a type of investment derivative that bundled home loans into securities and was sold to investors before the 2008 financial meltdown.
“HSBC reached a settlement-in-principle to resolve the Department of Justice’s civil claims relating to its investigation of HSBC’s legacy RMBS origination and securitisation activities from 2005 to 2007,” the lender said in a results statement.
“Under the terms of the settlement, HSBC will pay the DoJ a civil money penalty of $765m.”
The London-headquartered giant is the latest global bank to reach a US settlement over conduct in the run-up to the subprime crisis which sparked a worldwide recession.
However, the deal was agreed in July, and not included in HSBC’s first-half results.
HSBC posted advancing first-half profits and expressed optimism over the outlook – despite headwinds from rising costs, the China-US trade war and Brexit.
Pre-tax profit rose almost 5% to $10.7bn (R143.6bn) in the six months to end-June compared with a year earlier.
Net profit gained 2.5% to $7.173bn (R96.19bn).