London, May 5, 2026, 18:10 BST
HSBC Holdings shares fell 5.9% in London on Tuesday after the bank disclosed an unexpected $400 million loss linked to a fraud case, a setback that put private credit risk back at the centre of investor concern. The drop made HSBC one of the main drags on a weaker FTSE 100.
The timing matters. Regulators in the United States, Britain and elsewhere are already looking harder at banks’ links to the $3.5 trillion private credit industry, where loans are made outside public bond markets and often through less transparent structures. Reuters reported that HSBC’s loss was tied to lending to Apollo-backed Atlas SP and its financing of collapsed UK mortgage lender Market Financial Solutions, citing two people familiar with the matter.
HSBC’s own first-quarter numbers were not weak across the board, but they were not clean. The bank reported profit before tax of $9.4 billion, down $0.1 billion from a year earlier, while revenue rose 6% to $18.6 billion. Expected credit losses, money set aside for loans that may sour, rose to $1.3 billion from $876 million a year earlier; the board approved a first interim dividend of 10 cents a share.
Chief Financial Officer Pam Kaur said the charge involved loans HSBC had made to an unnamed private equity group that was then exposed to private credit-related loans. She called the case “idiosyncratic” and said the bank saw nothing comparable after reviewing high-risk exposures, while adding that HSBC would look at what more it could do on due diligence. The Guardian
MFS has been under scrutiny since its collapse earlier this year. Britain’s Financial Conduct Authority launched an enforcement investigation in March after the lender entered administration, leaving creditors including major banks and private credit funds facing a shortfall of more than 1.3 billion pounds. Court documents cited by Reuters previously raised allegations of financial irregularities and mismanagement, including possible double-pledging of assets.
The read-across hurt because HSBC is not alone. Barclays reported a 228 million pound impairment tied to MFS, while HSBC’s wealth revenue growth of 18% lagged Standard Chartered’s 32%, Reuters said. KBW analyst Ed Firth called HSBC’s overall result “lacklustre,” a blunt contrast with stronger recent numbers from some European peers. Reuters
There was an offset. HSBC lifted its 2026 banking net interest income guidance to around $46 billion from at least $45 billion, helped by a better interest-rate outlook. Banking net interest income is the money earned from lending and deposits after some trading-book funding costs are stripped out.
But the risk paragraph is not hard to find. HSBC also raised its expected credit loss charge forecast to about 45 basis points, or 0.45 percentage point, of average gross loans for 2026 from around 40 basis points, citing uncertainty. The bank said the macro outlook had become more volatile and pointed to stress scenarios tied to conflict in the Middle East, higher oil prices, rising inflation and weaker growth.
Group Chief Executive Georges Elhedery said HSBC was making progress in creating a “simple, more agile, growing HSBC” and that customers turn to the bank in uncertain periods. Investors, for now, were focused elsewhere: on how a large, profitable bank ended up with a sudden private-credit loss just as credit markets are under a sharper lens.
