HSBC share price: Group reaches $765m settlement with US over toxic mortgages

HSBC share price: Group reaches $765m settlement with US over toxic mortgages

HSBC Holdings (LON:HSBA) has reached a $765-million settlement in the US over its sale of residential mortgage-backed securities in the run-up to the financial crisis, prosecutors have said. The news comes after earlier this year, FTSE 100 peer Royal Bank of Scotland (LON:RBS) agreed a $4.9-billion settlement with the US Department of Justice (DoJ) over mis-sold mortgage-backed securities.

HSBC’s share price has been steady in London in today’s session, having climbed 0.52 percent to 659.10p as of 08:49 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index which has fallen into the red and currently stands 0.15 percent lower at 7,226.98 points. The group’s shares have lost more than 13 percent of their value over the past year, as compared with about a 4.3-percent fall in the Footsie.

HBSC reaches settlement with DoJ

The DoJ, Colorado District, said yesterday in a statement HSBC had agreed to pay $765 million as a civil penalty to settle claims related to its packaging, securitisation, issuance, marketing and sale of residential mortgage-backed securities between 2005 and 2007.

“HSBC made choices that hurt people and abused their trust,” said Bob Troyer, Attorney for the District of Colorado, commented in the statement, adding that the lender had chosen “to use a due diligence process it knew from the start didn’t work”.

The BBC meanwhile quoted HSBC as saying that it had since strengthened its internal controls and was ‘pleased’ to have resolved the probe. As is common in such settlements, the group did neither admit nor deny the claims.

Analysts on Asia-focused lender

As of October 5, the consensus forecast amongst 23 polled investment analysts covering HSBC for the Financial Times advises investors to hold their position in the company. According to MarketBeat, the Asia-focused lender currently has a consensus ‘hold’ rating and an average price target of 760.36p.

As of 09:09 BST, Wednesday, 10 October, HSBC Holdings plc share price is 658.80p.

By Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.
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