HSBC Agrees $470m US Mortgage Settlement

HSBC has agreed a $470m (£325m) settlement with US authorities over its mortgage activities ahead of the financial crisis.

The agreement with the London-based bank, which was announced after the FTSE 100 closed for business on Friday, means it must pay $100m in penalties and $370m in relief to borrowers and homeowners.

The deal resolves claims brought by US states and government agencies, including the Department of Justice.

It (Other OTC: ITGL - news) also requires the bank to improve standards for how it services loans and handles foreclosures.

New York Attorney General Eric Schneiderman said: "There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices."

His office said New York had about 136,000 borrowers who may be eligible for help from HSBC - with many losing their homes between 2008 and 2012.

The settlement with HSBC was announced three-and-a-half years after a similar deal was struck on the issue with five of the largest banks in the US.

It cost Citi, Ally Bank, Wells Fargo (Hanover: NWT.HA - news) , Bank of America (Swiss: BAC.SW - news) and JPMorgan Chase (Swiss: JPM.SW - news) $25bn collectively.

The settlements covered allegations that banks moved aggressively to remove mortgage customers, behind with their payments, from their homes.

HSBC is no stranger to financial penalties in the US - with the biggest issued in 2012 to settle a money laundering probe while other London-listed banks have also paid out vast sums to close legacy probes.

HSBC confirmed it had already made enough of a provision to cover the cost of the deal.

Kathy Madison, chief executive of HSBC Finance, said: "We are pleased to have reached this settlement and believe it is a positive result that benefits American homeowners and the US housing industry.

"Throughout the housing market downturn, HSBC stayed focused on home preservation and approached foreclosure as a last resort option, and this agreement affirms our commitment to assisting customers who are facing financial difficulties (Other OTC: UBGXF - news) ."