HSBC Faces Renewed Regulatory Scrutiny Over Data Practices And Risk Management: Report

HSBC Holdings, plc. (NYSE:HSBC) shares are trading higher on Wednesday. UK regulators have reportedly instructed HSBC to reassess its data collection and monitoring practices, focusing on the data crucial for its risk management systems in investment banking and trading.

The Bank of England’s Prudential Regulation Authority has directed HSBC to commission a Section 166 review of its data practices in commercial banking and global banking and markets, reported Bloomberg.

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This involves hiring an external expert to evaluate the firm’s practices and provide an independent report to the regulators.

The report noted that the review follows a previous regulatory warning three years ago about deficiencies in nine areas of HSBC’s risk management.

In response to the prior action, HSBC launched a plan called “Risk 2025” to address these issues by next year. With only months left in HSBC’s “Risk 2025” plan, the PRA has identified ongoing weaknesses in model risk, risk data quality, traded risk, and credit risk.

The new review aims to assess how HSBC plans to address these deficiencies in its wholesale credit and traded risk practices, per the report.

In January, the bank was slammed with a fine of £57.4 million ($73 million) by the Bank of England’s Prudential Regulation Authority (PRA) for historic depositor protection failings arising from the bank’s failures over several years to properly implement the requirements set out in the Depositor Protection Rules.

In July, HSBC disclosed that it plans to slow hiring and limit expenses under the outgoing CEO.

Investors can gain exposure to the stock via Avantis International Large Cap Value ETF (NYSE:AVIV) and Dimensional International Value ETF (NYSE:DFIV).

Price Action: HSBC shares are up 0.59% at $43.67 at the last check Wednesday.

Image: Shutterstock/ sylv1rob1

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