In most recent full fiscal year, the global bank saw legal costs, which cover “settlements and provisions in connection with legal matters,” decrease to US$681m from US$1.64bn. Globally, the bank tallied a 62% fall in pre-tax profits to US$7.1bn from US$18.9bn.
Among the bank’s major legal proceedings and regulatory matters in the past year is the Household International securities class action, which it has been involved in since 2002, which it settled for US$1.5bn last June.
The settlement means its legal spend will likely jump in the coming years.
HSBC is also involved in various litigation matters connected to Ponzi scheme mastermind Bernard Madoff, with litigation in the US, the UK, Bermuda, the Cayman Islands, Luxembourg, and Ireland. It is also involved in US mortgage-related investigations, US mortgage securitisation activity and litigation and anti-money laundering and sanctions-related matters in the US and the UK.
The company also faced tax-related investigations in the US, France, Belgium, Argentina, and India. It is also embroiled in the Panama Papers controversy; London interbank offered rates, European interbank offered rates and other benchmark interest rate investigations and litigation; foreign exchange rate investigations and litigation in the US, the EU, Switzerland, Brazil, South Korea, and South Africa; and the FIFA-related investigations.
HSBC recently conducted a legal advisory panel review, adding Davis Polk & Wardwell to its stable of law firms which includes Allen & Overy, Clifford Chance
, Freshfields Bruckhaus Deringer
, and Norton Rose Fulbright
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HSBC cut its legal spend by nearly US$1bn in 2016 after an increase of US$500m in 2015, according to its