A Hong Kong tribunal has fined HSBC Holdings’ (LON:HSBA) private banking unit a record HK$400 million ($51 million). The fine was imposed over a case related to the sale of Lehman Brothers-linked structured financial products between 2003 and 2008.
HSBC’s share price has jumped in London this morning, having added 1.23 percent to 738.60p as of 10:23 GMT, outperforming the broader UK market, with the benchmark FTSE 100 index currently better off 0.28 percent at 7,432.02 points. The group’s shares have added more than 15 percent to their value over the past year, and are up by some 12 percent in the year-to-date.
Fine for HSBC
Hong Kong’s Securities and Futures Commission (SFC) announced in statement yesterday that HSBC Private Bank had been fined a record sum of HK$400 million after the Securities and Futures Appeals Tribunal upheld the regulator’s disciplinary action against the bank for “material systemic failures” in relation to the sale of derivative products. The products were Lehman Brothers-related Notes and Leveraged Forward Accumulators, sold in the run-up to the global financial crisis in 2008.
Reuters reported in its coverage of the news that the tribunal had also ‘partially suspended’ the bank’s registration for dealing in securities for a period of one year, according to a copy of the order seen by the newswire.
HSBC, however, noted that the suspension of licenses would not affect its current private banking operations in Hong Kong.
“HSBC Private Banking has stringent processes and controls [...] and has enhanced its investment advisory model to further align investments to client needs and to deepen clients’ understanding of the nature and risks of the products,” the lender said, as quoted by Reuters.
Analysts on HSBC
JPMorgan Chase & Co reiterated its ‘neutral’ rating on HSBC last week, valuing the shares at 690p. According to MarketBeat, the lender currently has a consensus ‘hold’ rating and an average price target of 738p.
HSBC recently updated investors on its third-quarter performance, posting a rise in profits.