Hortensa Aliai

Yeah, so the $400 million fraud-related charge is linked to a UK company that no one had heard of before February called Market Financial Solutions.

It collapsed at the beginning of February under allegations of fraud and what they call double pledging of assets.

So it was pledging the same piece of collateral to multiple lenders, which is an illegal practice.

And HSBC had an indirect exposure to MFS, basically through lending that it was doing to Atlas, a lender owned by the private equity giant Apollo.

The write down, it makes it one of the most impacted lenders from the fallout of MFS.

Yeah, so the fallout is quite widespread.

There's a lot of banks involved like Santander, Wells Fargo, Barclays, and now HSBC.

There's also smaller private credit firms like Castle Lake, as well as obviously Apollo's Atlas.

Well, they're anticipating that things could get a lot worse than they are.

So they've basically set aside $300 million to cover impairments tied to the conflict.

And that comes after its rival, Standard Chartered, set aside $190 million to eventually deal with losses from the war in Iran.

Both of these banks have quite a strong lean to the Middle East and Asia.

And one of the big themes of the restructuring by HSBC CEO George El-Hedry was that

he would lean the bank more towards its home markets, but also exploit its strong presence in the Middle East.

Yeah, definitely.

I mean, HSBC is still performing very well.

Its share price is up something like 50% over the past year.

And its revenues were up.

It did take a hit on its profits, but was largely tied to an increase in its costs.

There's still some questions around whether Georgia Hedry is going to be able to deal with a headcount issue that HSBC has.