HSBC sets aside $897mn over potential mortgage-bond settlement, mediation

by Francis Monfort07 May 2018

HSBC Holdings has disclosed that it recorded $897 million in settlements and provisions in connection with legal and regulatory matters during the first quarter.

The company said that the item relates to its active discussions with the Department of Justice with a view toward potential resolution of civil claims. The discussions, which developed further during the first quarter, relate to an investigation by the DOJ into HSBC’s legacy residential mortgage-backed securities securitization activities.

HSBC said there can be no assurances as to how or when the matter will be resolved, or whether this matter will be resolved prior to the commencement of formal legal proceedings by the DOJ or whether the ultimate loss will exceed the provision.

Additionally, HSBC said that a portion of the first-quarter provision relates to court-ordered mediation discussions between HSBC Mortgage Corporation (USA) and Decision One Mortgage with Residential Funding.

HSBC Holdings, the parent company of HSBC, reported profit before taxes of $4.76 billion during the quarter, down from $4.96 billion in the year-ago quarter. Reported revenue was $13.71 billion, up from $12.99 billion a year ago. Adjusted profit before taxes was $6.03 billion, down from $6.21 billion in the first quarter of 2017.


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