HSBC made $250m deal in Irish court

HSBC’s interim results reveal that the company made a $250m (€188m) settlement in the Irish High Court as a result of investments in Bernie Madoff’s Ponzi scheme.

The bank’s interim results reveal that in July, a settlement was reached for $250m plus a contribution of $43m towards costs in respect of a claim by Thema International Fund plc against HSBC Institutional Trust Services (Ireland) Limited in the High Court.

Thema International Fund was represented by William Fry solicitors, who declined to comment on the case.

Overall, HSBC posted lower-than-expected earnings, as a slowdown in emerging markets led to lower revenue and revived concerns about growth prospects at Europe’s biggest bank. Shares fell more than 5% on the news.

Pre-tax profit rose 10% in the first half of the year as the bank’s three-year cost-cutting plan paid off and losses on bad debts declined. But this fell short of forecasts after a steeper-than-expected 12% drop in revenue.

HSBC chief executive Stuart Gulliver is two-and-a-half years into a restructuring plan and has sold or exited 54 businesses. He has cut $4.1bn in annual costs and is making progress on returns.

But some analysts said growth will be a challenge given a tough global economy and tighter regulations.

“For all the worthy progress in terms of strategic repositioning... weak revenues driven by anaemic loan growth and a declining margin constrain financial progress and returns,” said Investec analyst Ian Gordon.

Pre-tax profits rose to $14.1bn from $12.7bn a year ago. Revenue fell 12% to $34.4bn, stripping out an accounting gain made on the value of its own debt.

“There has been a slowdown in faster-growing markets in recent quarters, even emerging markets go through business cycles,” Mr Gulliver said. “But the reality is those markets continue to grow relatively quickly.”

Profits from Latin America more than halved to $466m as losses from bad loans jumped in Brazil and Mexico.

The bank had also set aside $367m to compensate customers in Britain who were mis-sold payment protection insurance against loan defaults, taking its provision for that issue to $2.8bn.

Hong Kong and the rest of Asia accounted for $8.1bn of first-half profit, or 62% of the group total. Mr Gulliver is increasing focus on those regions.

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