HSBC Holdings will take a $1.1 billion provision in its third-quarter results related to long-running litigation stemming from the Bernard Madoff fraud, the company said Sunday.
The charge is connected to a 2009 lawsuit in Luxembourg where the bank's unit, HSBC Securities Services Luxembourg, is defending a claim for restitution of securities and cash brought by Herald Fund SPC.
The provision follows an October 24 ruling where the Luxembourg Court of Cassation denied the HSBC unit's appeal regarding the securities restitution claim, according to the company.
The court did, however, accept the bank's appeal concerning a cash restitution claim.
HSBC said its Luxembourg unit will now pursue a second appeal before the Luxembourg Court of Appeal.
The bank cautioned that "the eventual financial impact could be significantly different" due to the pending appeal and uncertainties in determining the final amount.
The $1.1 billion provision will reduce the group's core capital ratio by approximately 15 basis points, the company stated.
HSBC said the charge will be classified as a notable item and will not affect its return on tangible equity targets or any dividend for the 2025 financial year.
The legal setback comes as the bank focuses on managing its capital, having recently concluded a $3 billion share buyback program.
The bank is scheduled to announce its third-quarter results on October 28.
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