HSBC May Overstate Assets by $92.3 Billion: Forensic Asia

HSBC Holdings Plc (HSBA), Europe’s largest bank, may be overstating its assets by as much as $92.3 billion and need to raise capital, according to analysts at Forensic Asia led by Thomas Monaco.

Loan loss reserves, tax assets and pension plan assets at the London-based bank are “questionable,” Monaco and Andrew Haskins wrote in a note to clients on Jan. 14, rating the bank a sell. The firm may need as much as $111 billion of capital, they wrote. HSBC spokeswoman Heidi Ashley declined to comment.

New Basel III rules on capital, “coupled with asset valuation concerns, lead us to conclude that HSBC’s stated capital ratios are substantially weaker than the group would have investors believe,’ the analysts wrote in the note.

Chief Executive Officer Stuart Gulliver in November said the lender was optimistic amid a broadening economic recovery. He said in May that he will cut an additional $3 billion of expenses after beating an earlier target with the closing or sale of 60 businesses and the elimination of 46,000 jobs since the start of 2011.

Out of 46 analysts surveyed by Bloomberg, 25 rate HSBC a buy, 18 a hold and three a sell. The Daily Telegraph reported the note earlier today.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net

To contact the editor responsible for this story: Simone Meier at smeier@bloomberg.net

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