HSBC says it is under investigation by U.S. regulators in relation to hiring practices of people tied to government officials in Asia. As Grace Pascoe reports Europe's largest bank has also warned of an uncertain environment particularly in top market China after weaker than expected results.
It's a double whammy for HSBC. Not only have profits fallen way short of expectations. But the bank is now under investigation - for its hiring practices in Asia. Shares have slumped 3.7 percent. And Matthew Beesley of Henderson Global Investors can't see a silver lining just yet. (SOUNDBITE) (English) HENDERSON GLOBAL INVESTORS, HEAD OF GLOBAL EQUITIES, MATTHEW BEESLEY, SAYING: "Asia has clearly been a negative headwind for HSBC, given its very large exposure to the region. But beyond that as well when you look at the results by sector the oil and gas sector is taking its toll as well." The bank is being probed by the U.S. Securities and Exchange Commission Over the hiring of "princelings" - relatives of China's leaders and executives, in Asian state-owned enterprises. With HSBC saying the impact "could be significant". In the fourth quarter of 2015 HSBC lost 1.3 billion dollars And annual profit before tax was less than 19 billion dollars - nearly 3 billion under analysts estimates. (SOUNDBITE) (English) HENDERSON GLOBAL INVESTORS, HEAD OF GLOBAL EQUITIES, MATTHEW BEESLEY, SAYING: "With so much cost cutting having already been made by many of the more proactive banks, it is very hard to see how banks are going to positively surprise from here and deliver above average earnings growth." Asia made up 83.5 percent of HSBC's global pretax profit in 2015. But with China's economy now slowing, that's likely to fall in 2016. So too will the CEO's pay. Stuart Gulliver will earn a quarter of a million pounds less, although he'll still receive 7.34 million pounds.