HSBC Holdings, plc is facing renewed scrutiny from UK regulators regarding its data collection and monitoring practices. The Bank of England’s Prudential Regulation Authority (PRA) has instructed HSBC to conduct a comprehensive review of its data practices, particularly those vital for risk management systems within investment banking and trading.
This directive, reported by Bloomberg, comes as a result of concerns about the bank’s data practices in commercial banking and global banking and markets. The PRA has ordered HSBC to engage an external expert to assess its data management practices and provide an independent report.
This latest review follows a previous warning issued by the PRA three years ago, highlighting deficiencies in nine areas of HSBC’s risk management framework. In response to the earlier concerns, HSBC launched the ‘Risk 2025’ initiative to address these issues by the end of 2025. However, with just months remaining, the PRA has identified persistent weaknesses in areas like model risk, risk data quality, traded risk, and credit risk.
The new review aims to evaluate HSBC’s strategies for addressing these deficiencies in its wholesale credit and traded risk practices. This news comes on the heels of a £57.4 million ($73 million) fine levied on HSBC by the PRA in January for past depositor protection failings.
Despite these challenges, HSBC shares have shown positive momentum, rising 0.59% to $43.67 on Wednesday. Investors interested in exposure to HSBC can consider ETFs like Avantis International Large Cap Value ETF (AVIV) and Dimensional International Value ETF (DFIV).
