UK fines HSBC $73 million for failing to protect deposits

Written by Ian Withers and Sinead Cruz

LONDON, Jan 30 (Reuters) – HSBC has been fined 57.4 million pounds ($73 million) for “serious failures” to protect some depositors over several years, the first such penalty under British rules designed to protect customers. In the event of bank failure. .

The Bank of England's Prudential Regulation Authority (PRA) said on Tuesday that HSBC had not accurately identified deposits eligible for Britain's Financial Services Compensation Scheme (FSCS), which protects customer funds up to £85,000.

This is the second-largest fine ever imposed by the PRA, surpassed only by the £87 million fine imposed on Credit Suisse in July 2023.

Sam Woods, deputy governor of the Bank of England and chief executive of HACCP, said: “The serious breaches in this case go to the heart of HACCP’s aim of safety and soundness.”

“It is important that all banks fully comply with the decision-readiness requirements.”

UBS's takeover of Swiss rival Credit Suisse in March raised questions about whether the regulatory framework for too-big-to-fail banks, which emerged from the 2008 financial crisis, was fit for purpose.

Globally systemically important banks, such as HSBC and UBS, must plan to solve these problems, which should allow regulators to reduce them without causing wider systemic consequences.

UK deposit protection rules require banks to ensure that important information is kept so that the FSCS can compensate customers if the company fails.

The failures at one HSBC unit – which was found to have incorrectly identified 99% of deposits from eligible beneficiaries as ineligible – were such that the Bank of England felt that these failures would have “materially undermined” any efforts Regulatory bodies are making efforts to end it.

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HSBC was happy to resolve the matter.

An HSBC spokesperson said: “The latest HSBC notice acknowledges the bank’s cooperation with the investigation, as well as our efforts to fully resolve these issues. We remain focused on serving our customers.”

The TRA said the failures occurred at HSBC Bank plc between 2015 and 2022, and at HSBC UK Bank plc between 2018 and 2021.

The banking watchdog reduced HSBC's fine to £57 million from £96.5 million in exchange for the bank's cooperation with the investigation, the regulator added.

(1 US dollar = 0.7881 pounds)

(Reporting by Ian Withers and Sinead Cruz; Editing in Spanish by Jose Muñoz)

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