HSBC Sets Aside $1.1 Billion for Madoff Fraud Litigation

Bloomberg

Watch HSBC Sets Aside $1.1 Billion for Madoff Fraud Litigation - Bloomberg on Dailymotion

Transcript

00:00HSBC, one of your heavy-volume stock movers this morning, due to set aside $1.1 billion

00:05to cover litigation by investors who lost money in Bernie Madoff's fraud in a case which

00:11dates all the way back to 2009.

00:14Talk about a throwback.

00:15Shares down about 1%, we'll call it.

00:17All over the story is Bloomberg's Tom Metcalfe, who leads our MIA Finance and Investing coverage.

00:22Can you just walk us through the details of this?

00:24We haven't heard Bernie Madoff's name in a while.

00:26Yeah, exactly.

00:26It's a throwback, as you say.

00:28So, yeah, it's coming out of the Luxembourg court decision on Friday, where effectively

00:33they rejected HSBC's appeal.

00:35So what's happening is a hedge fund who lost money on the Madoff scandal is basically suing

00:40HSBC both for securities restitution and also a return of cash.

00:45And what the Luxembourg court did was, I think it threw out the cash sort of request, but

00:49did sort of stand behind the idea that securities, HSBC, may need to sort of effectively pay this

00:56fund back.

00:57And it's really interesting.

00:59It's been a long, long overhang, obviously, on the legal side.

01:02And then, yeah, kind of catching everyone by surprise to come out with a 1.1 billion hit

01:06like a day before earnings.

01:08You know, it's definitely something that HSBC can manage.

01:11But, of course, no firm out there wants a surprise, you know, 10-figure potential provision.

01:16What's the legal process from here, given this case has been pretty longstanding?

01:21Yeah, exactly.

01:22From 2009, right?

01:23So HSBC said in their statement they're going to appeal again.

01:26And so I think, you know, this provision, you know, might prove to be overkill.

01:30It might not be entirely needed.

01:32But, you know, as this winds through the courts, HSBC have basically made the call that, look,

01:36it's not going away.

01:37And let's remove this as a sort of potential cost.

01:40And perhaps in the future, if we are, you know, able to win our case in the courts, we

01:44can kind of write it back.

01:46Talk to us a little bit about the earnings.

01:48I say, sorry, not the earnings, the M&A story broadly here.

01:51Your team has put together a story that I've been obsessed with for a very long time, since

01:55my time here in London.

01:56But just walk us through kind of some of the threads that you're seeing when it comes to

01:59M&A across the various regions of Europe.

02:01Yeah, so the story is like a look at all the M&A we've been seeing in the banking and

02:04finance sector.

02:06And, you know, the sort of key message there is all the sort of real big deals probably

02:11bankers, you know, spend their time dreaming about.

02:12They're not quite coming through.

02:14But the level below that, there is so much activity.

02:17And I think today we just saw some Nordic Bank merger again, just kind of that kind of

02:21sense of quite a lot of national deals.

02:23But when you get to the real game-changing ones, so the Unicredit Commerce Banks or the BBVA

02:28Sabadell even, you're seeing a lot of government pushback.

02:31And that's probably not going anywhere.

02:33And it just speaks to this idea that it's always complicated in the EU just because

02:37there's so many governments, so many regulators.

02:40So, you know, the story is really about, yes, you'll be hearing a lot about M&A, but it's

02:43probably, you know, that one level down from the kind of real blockbuster deals.

Category

Transcript

Be the first to comment

Recommended