London, May 5, 2026, 18:10 BST
HSBC Holdings slid 5.9% in London trading Tuesday as word of a surprise $400 million loss tied to a fraud case rattled investors, reigniting anxieties over private credit risk. That hit left HSBC among the top weights pulling the FTSE 100 lower.
Timing here is critical. Regulators in the US, the UK, and other countries have begun sharpening their scrutiny of banks’ exposure to the $3.5 trillion private credit sector—a space known for lending that takes place outside the public bond markets, often wrapped in opaque structures. According to Reuters, HSBC’s loss traces back to loans connected to Apollo-backed Atlas SP, as well as its role financing the now-defunct UK mortgage lender Market Financial Solutions, sources said.
HSBC turned in first-quarter profit before tax of $9.4 billion, slipping just $0.1 billion from a year ago—yet the headline masked some messier details. Revenue climbed 6% to $18.6 billion. Expected credit losses jumped to $1.3 billion, compared to $876 million in the same period last year. The board signed off on a first interim dividend of 10 cents per share.
Pam Kaur, HSBC’s Chief Financial Officer, described the charge as tied to loans made by the bank to an unnamed private equity group, which subsequently ran into issues with private credit-linked loans. She labeled the situation “idiosyncratic” and noted that, after checking its higher-risk exposures, HSBC hadn’t found similar cases. Kaur also said the bank would consider additional steps to strengthen due diligence. The Guardian
MFS drew regulatory heat after its collapse earlier this year. In March, the Financial Conduct Authority kicked off an enforcement probe when the lender went into administration, saddling creditors—among them big banks and private credit funds—with a hole topping 1.3 billion pounds. Reuters, citing court filings, outlined allegations of mismanagement and financial irregularities, including the prospect of assets being pledged twice.
HSBC wasn’t the only one feeling the pressure—Barclays logged a £228 million impairment related to MFS, and HSBC’s 18% rise in wealth revenue trailed Standard Chartered’s 32% jump, according to Reuters. KBW’s Ed Firth didn’t mince words, calling HSBC’s performance “lacklustre,” especially compared to the recent strength shown by certain European rivals. Reuters
Offsetting pressures elsewhere, HSBC bumped up its 2026 banking net interest income target to roughly $46 billion, up from its prior call of at least $45 billion, citing a rosier outlook for rates. That figure, banking net interest income, refers to what the bank makes on lending and deposits after certain trading-book funding costs are factored out.
HSBC didn’t bury the risk discussion. The bank lifted its expected credit loss charge outlook for 2026 to roughly 45 basis points—0.45 percentage point—of average gross loans, from about 40 basis points previously, blaming uncertainty. More volatility in the macro environment, HSBC noted, with scenarios now factoring in Middle East conflict, higher oil, sticky inflation, and softer growth.
Group Chief Executive Georges Elhedery said HSBC is moving forward with efforts to build a “simple, more agile, growing HSBC,” adding that clients seek out the bank when markets turn rocky. Still, investors’ attention drifted to a different question—how did a major, profitable institution suddenly stumble into a private-credit loss, especially now, with credit markets facing tougher scrutiny?
