HSBC, one of the world’s biggest banks, has “glaring problems” and may need to plug a $111 billion capital gap, a controversial new report claims.
Two analysts for Forensic Asia, a recently launched boutique Hong Kong research firm, have heavily criticized the bank for “overstated earnings, inadequately capitalized balance sheets, legal and regulatory problems” in a research note this week.
HSBC is generally viewed as one of the U.K.’s best-placed banks, and came through the financial crisis without having to raise extra capital, thanks in large part to the global scale of its operations. It had a tier 1 capital ratio – a key measure of financial health – of 13.3 percent at the end of the third quarter of 2013 – far above the 4 percent required by international regulators.
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