HSBC Holdings plc (LON:HSBA) today provided an update on the Herald Fund SPC litigation relating to the Madoff fraud.

In a 2009 lawsuit in Luxembourg relating to the Bernard L. Madoff Investment Securities LLC fraud, HSBC Securities Services Luxembourg (HSSL) is defending a claim brought by Herald Fund SPC for restitution of securities and cash.

On 24 October 2025, the Luxembourg Court of Cassation denied HSSL’s appeal in respect of Herald’s securities restitution claim, but accepted HSSL’s appeal in respect of Herald’s cash restitution claim. HSSL will now pursue a second appeal before the Luxembourg Court of Appeal.

If HSSL is unsuccessful in that second appeal, it will contest the amount HSSL is required to pay in subsequent proceedings before the Court of Appeal.

Following this development, HSBC Holdings plc will recognise a provision of US$1.1bn in its consolidated financial results for Q325, an around 15 bps impact on the Group’s CET1 capital ratio.

Given the pendency of the second appeal and the complexities and uncertainties associated with determining the quantum of restitution, the eventual financial impact could be significantly different. The provision will be classified as a material notable item and will not impact FY25 RoTE excluding notable items or any dividend.

Various non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the US whose assets were invested with Bernard L. Madoff Investment Securities LLC. Based on information provided by Madoff Securities as at 30 November 2008, the purported aggregate value of these funds was $8.4bn, including fictitious profits reported by Madoff.

Based on information available to HSBC, the funds’ actual transfers to Madoff Securities minus their actual withdrawals from Madoff Securities during the time HSBC serviced the funds are estimated to have totalled approximately $4bn.

Various HSBC companies have been named as defendants in lawsuits arising out of Madoff Securities’ fraud.