The Independent ran a story last week confirming that HSBC has settled a $1.6bio subprime class action lawsuit in the US from 14 years ago resulting in a Q2 pre-tax charge of some $585mio, underscoring a further sorry chapter in this bank's then $14bio acquisition of what was then known as Household Financial.
While this is a major positive development in reducing the conduct risk from the shares, further potential liabilities still linger, including Fifa related payments, tax evasion and FX related activities. This lawsuit is related to remarks made by senior execs at the lender which appeared to be misleading to investors about lending practices. This settlement underscores still remaining conduct concerns faced by the banking sector in the post financial crisis and new regulatory environment facing many financial institutions. Conduct risk can really take the fun out of it....
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