HSBC’s legal spend jumped by $500m (£354m) in 2015 to a colossal $1.65bn, according to the bank’s annual accounts.
The rise, which included an uptick in legal costs in the fourth quarter of last year of around $700m, dragged the bank into an $858m loss in that period. The majority of the funds were spent settling litigation and compensating UK customers for mis-sold insurance products.
HSBC was also one of five banks to settle with regulators over foreign exchange rate manipulation allegations in October, agreeing to pay $285m to the US authorities. The bank was advised by Locke Lord on the settlement.
Overall, the bank reported annual pre-tax profit growth of 1 per cent to $18.9bn. This signalled a return to growth in 2015 after a 17 per cent drop in profit the year before.
HSBC’s annual report, released today (22 February), also revealed the bank is being investigated by the US Securities and Exchange Commission over its Asia hiring processes, which is expected to add to the bank’s growing litigation costs.
A footnote to the report said it was one of “multiple financial institutions” being investigated “in relation to hiring practices of candidates referred by or related to government officials of employees of state-owned enterprises in Asia-Pacific”.
It added it was too early to predict the resolution of the matter “including the timing or any possible impact on HSBC, which could be significant”.
Ongoing litigation involving the bank in the London courts includes foreign exchange rate investigations and disputes and claims relating to Libor rigging.
Recent research by The Lawyer showed that the number of claims against HSBC at the High Court dropped dramatically in 2015 as the limitation period for claims arising out of the financial crisis ended. HSBC was named as a defendant in 13 cases last year, down from 25 cases in 2014 and 36 cases in 2013.
The financial results come a week after HSBC revealed it would not relocate its UK headquarters to Hong Kong. The move could have seen its approximate 200 lawyers moving out of the UK.