HONG KONG, March 7 (Reuters) - HSBC Holdings Plc,Europe's biggest bank, has started searching for a replacementfor its long-serving auditor, KPMG, after having paid $81million to the accounting firm in fees last year.
This would be the first time since 1991 that the bank hasput in place a tender process for its external auditors.Previously, KPMG was re-appointed by the bank's board followingthe recommendations of HSBC's risk and audit committees.
A new audit firm, if appointed, will begin its work in 2015,HSBC said in its annual report.
Fees paid by HSBC to KPMG have fluctuated over the past fewyears, peaking at $87 million in 2011, more than three-quartersof which went to paying for audit services. The rest went topaying for taxation and compliance-related services.
The bank appointed a new group head of internal audit inFebruary, with Manveen Pam Kaur replacing Paul Lawrence, whoretired after 31 years at HSBC.
HSBC's decision to consider hiring new auditors comes afterBritain's Competition Commission said many companies arereluctant to change external auditors because they facesignificant costs in switching.
In the study, the commission found that 31 percent of FTSE100 companies and 20 percent of FTSE 250 companies have had thesame auditor for more than 20 years. It also said it isconsidering mandating a compulsory rotation of audit firms.
Most large companies pick one of the "Big Four" accountingfirms - Ernst & Young, PricewaterhouseCoopers, Deloitte, andKPMG - to audit their books.
HSBC Holdings (HSBA)