US court fines HSBC US$2.46 billion over Household International case

HSBC has been ordered by a Chicago court to pay about US$2.46 billion in a class action lawsuit against its former Household International unit for violating federal securities laws, a verdict the British banking giant plans to appeal.

The verdict against Household International, the credit card and mortgage lender the group acquired in 2002, follows a costly US$1.92 billion settlement over money laundering last year.

HSBC had made a US$1.7 billion provision related to legal proceedings and regulatory matters in its first-half results.

“HSBC has already made some provision on the case but I expect it is likely to make further, subject to appeal [results],” said Keefe Bruyette & Woods analyst Mark Phin.

The group is trying hard to control costs, including exiting India’s retail broking and depository services. However, it might have to face huge legal costs on the case, according to Investec Securities analyst Ian Gordon.

The judgment in Chicago was the largest in a securities fraud class action that went to a trial, according to a statement from the Robbins Geller Rudman & Dowd law firm that represented investors. Almost all securities fraud class action cases settle before going to a jury.