HSBC has reviewed lending policies after $400 million fraud hit, chairman says

* HSBC chairman Brendan Nelson ​says ⁠review found fraud to be a one-off

* Shareholders ​question HSBC's risk management at AGM

* HSBC may recover some funds; actual loss not yet determined, ​Nelson ‌says

LONDON, May 8 (Reuters) - HSBC has "substantially completed" a review of its lending ⁠policies and practises after it took a $400 million ⁠provision against a fraud in its ​UK business, Chairman Brendan Nelson told shareholders on Friday. The bank reported the unexpected charge, which sources told Reuters was linked to the collapse of British mortgage lender Market ​Financial Solutions, ‌along with its first-quarter results on Tuesday.

"We have been looking at other facilities of a similar nature to see to what extent there are lessons to be learned," Nelson told shareholders, adding that so far the bank ​has determined the issue to be a one-off rather than anything systemic.

HSBC's potential loss was ‌the latest sign of stresses in the $3.5 trillion private credit market, which has ballooned in recent years and ‌more recently attracted scrutiny from regulators following some high-profile losses and questions about the opacity of the sector.

Shareholders questioned the bank's risk management and lending procedures at ​its annual shareholder meeting in London on Friday, days after the lender's shares fell 6% when ‌it announced the surprise fraud hit.

HSBC may yet recover some of the money, Nelson said.

"We haven't booked a loss yet, at the moment it is ⁠just a provision, ⁠there is a long way to go before ‌we determine the actual amount lost," Nelson said.

The bank has declined to comment on the identity ​of the company ​which triggered the loss, but two sources told Reuters on ‌Tuesday it was related to the bank's exposure to MFS via Apollo Global Management-linked unit Atlas SP.

A spokesperson for Atlas declined to comment on Tuesday. (Reporting by Lawrence White; Editing by Tommy Reggiori Wilkes)

HSBC Holdings

Apollo Global Management