HSBC said possible damages from a lawsuit filed by a U.S. regulator over improperly sold mortgage-backed securities could cost the bank as much as $1.6bn.
Bloomberg News reports that the Federal Housing Finance Agency 'alleges that the defendants caused hundreds of millions of dollars in damages to Fannie Mae and Freddie Mac,' the bank said Monday in its first-half earnings report.
'Based upon the information currently available, it is possible that these damages could be as high as $1.6bn.'
The FHFA filed a suit in September 2011 over residential mortgage-backed securities sponsored by HSBC. The FHFA sued 17 other banks that year, seeking to recover losses on $196bn in mortgage-backed bonds sold to Fannie Mae and Freddie Mac, which have operated under U.S. conservatorship since they were seized amid subprime losses in 2008.
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