HSBC Fined £57.4 Mln For Failures In Deposit Protection

(RTTNews) - British lending major HSBC Holdings Plc has been fined 57.42 million pounds by the Bank of England's Prudential Regulation Authority or PRA for failures in customer deposit protection identification and notification. The fine, the second highest imposed by the PRA, reflects the seriousness of the failings, according to the financial watchdog.

The agency has fined HSBC Bank plc and HSBC UK Bank plc for historic depositor protection failings. The companies, over many years, failed to properly implement the requirements set out in the Depositor Protection Rules.

Meanwhile, the PRA said it does not consider that the companies' breaches were deliberate or reckless.

As per the Depositor Protection Rules, the companies are required to put adequate systems and controls, and governance, to ensure the integrity of critical information. Financial Services Compensation Scheme or FSCS relies upon these information to make prompt payments to depositors in the event of a firm failure.

In a statement, the PRA noted that HSBC Bank and HSBC UK Bank failed to accurately identify deposits that were eligible for FSCS protection. The failings occurred for HSBC Bank between 2015 and 2022, and for HSBC UK Bank between 2018 and 2021.

HSBC Bank's depositor protection failings were so significant the PRA determined that it had materially undermined the firm's readiness for resolution, it said.

HSBC Bank also failed to be duly open and cooperative with the PRA in not alerting the agency over an around 15-month period about problems identified in the incorrect marking of accounts as "eligible" for FSCS protection.

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said, "The serious failings in this case go to the heart of the PRA's safety and soundness objective. It is vital that all banks comply fully with our requirements around preparedness for resolution. HBEU fell far short of its obligations in this area, and failed to disclose its failings to us in a timely manner. These failures led to today's action, including the significant fine."

The PRA noted that the fine was reduced by 15 percent due to the companies' cooperation throughout the investigation, including the early admission of certain rule breaches, and by further 30 percent as they agreed to resolve the matter. Without these reductions, the fine imposed by the PRA would have been 96.5 million pounds.

The PRA's highest fine imposed to date was 87 million pounds on Credit Suisse in July 2023.

In December last year, South Korea's financial regulator reportedly had imposed a fine of 26.5 billion won or $20.4 million on HSBC and BNP Paribas for engaging in illegal naked short selling.