Two subsidiaries of HSBC Holdings PLC UK have been fined a total of £57.4m after failing to properly comply with a requirement to guarantee customers' bank deposits in the event of insolvency.
The fine represents the second highest penalty ever imposed by Prudential Regulatory Authority, which said HSBC failed “over many years” to properly put in place the requirements to safeguard some deposits between 2015 and 2022.
The UK financial regulator said on 30 January that among its failings, the HSBC incorrectly marked 99% of its eligible beneficiary deposits as “ineligible” for protection under the Financial Services Compensation Scheme (FSCS).
The scheme protects up to £85,000 per eligible depositor if their bank fails. Under the FSCS, lenders must have systems to help regulators identify deposits that would be eligible for protection.
Sam Woods, chief executive of the PRA, said the bank’s failings went “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,” he added. “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.”
HSBC said in a statement that it was “pleased to have resolved this historic matter” and continues “to remain focused on serving our customers”.
