HSBC disclosed a $400mn fraud-related charge tied to the collapse of UK mortgage provider Market Financial Solutions, making it one of the banks hardest hit by the February collapse. The charge sent shares down more than 6% on the day, catching investors off guard.

Unlike Barclays, Santander and Jefferies, which lent directly to MFS, HSBC maintained indirect exposure through so-called back-leverage to Apollo Global Management's Atlas SP unit. HSBC funded 80% of the loans in the SPV tied to MFS - unusually high given that 60-70% would be more typical in the sector.

The loss strikes at CEO Georges Elhedery's strategy of building a financing powerhouse through the corporate and institutional banking division. Regulators have warned about the "layer cake" of leverage in private credit that banks struggle to fully comprehend. Barclays has already pledged to tighten lending controls after its own £228mn MFS loss.