HSBC calls in police for €90 million fraud investigation

The alarm was raised when the main euro account at HSBC, which normally holds between €30 million and €1 billion, hit zero. Soon after, a single transaction moving €90 million from the account was traced back to within the ranks of the middle office department at the UK bank. Sources say that one person on the operations side of the MTN desk and one on the ABS desk were involved. These two individuals are relatively junior, and speculation is rife inside the bank that other, more senior figures might be involved.

A City Police department spokesperson confirmed: “Jagmeet Channa, 25, has been charged with conspiracy to defraud, money laundering and abusing a position of trust. He has been remanded to appear at Southwark Crown court on June 25. Another man, 27, has also been arrested and a further two men, 33 and 38 remain on police bail in connection with the enquiry.”

An HSBC statement says: "HSBC is cooperating fully with a police investigation into an alleged fraud at the bank. As the matter is before the courts we cannot comment further. No customer funds were involved and no transactions were disrupted. No customer or bank funds were lost in the alleged fraud.”

At HSBC, as at other banks, international transfers and client payments require at least two people to complete a transaction. Following recent high profile cases at Société Générale and Credit Suisse, another leading bank has discovered potential vulnerabilities, which went undetected until it was nearly too late. Fortunately for HSBC, it is believed that all of the €90 million has been reclaimed within 24 hours. HSBC insiders say it is not yet clear whether other transfers were completed before the alarm was raised.