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LONDON/PARIS, April 9 (Reuters) - French magistrates haveordered HSBC Holdings Plc to post a 1 billion euro($1.1 billion) bail to cover a potential fine after the bank wasput under formal criminal investigation over allegations ithelped customers dodge tax.
It is the latest problem to hit HSBC over a tax evasionscandal at its Swiss private bank. HSBC said it intends toappeal the French magistrates' decision, which it said was"without legal basis and the bail is unwarranted and excessive".
The amount of the deposit is almost half of the scale of thealleged fraud by the HSBC, a person familiar with the mattersaid. The magistrates estimate HSBC's fraud is about 2.2 billioneuros, the source said.
The source said HSBC contests that figure, and the bank hasalways disputed the number of clients the French authoritieshave claimed its Swiss bank had.
The source said the deposit had to be posted by June 20,which would allow an appeals court to consider HSBC's appeal.
HSBC is the second big bank to have a hefty bail imposed onit by French magistrates in the last year, after Switzerland'sUBS had to provide 1.1 billion euro to the court tocover a potential fine for alleged money laundering. UBS'sappeal against that bond was dismissed.
Under French court process, companies can be ordered to posta deposit when they are put under formal investigation, known as'mise en examen', even if charges are not brought.
The latest move is against HSBC's holding company, relatingto matters in 2006 and 2007, and steps up the pressure on theBritish bank after a series of scandals in recent years haveprompted criticism it is too big and complex.
HSBC has admitted failings in controls at its Swiss privatebank following media reports that it helped wealthy customersconceal millions of dollars of assets.
HSBC's Swiss Private Bank had already been placed underformal criminal examination by magistrates in both France andBelgium, but the latest move is against the holding company.HSBC's Swiss unit previously posted a 50 million euro bond withFrench magistrates.
Various tax, regulatory and law authorities, including inBritain, Argentina and Switzerland, are also looking at theallegations. ($1 = 0.9289 euros) (Reporting by Steve Slater in London and Chine Labbe in Paris;Editing by Sinead Cruise)
HSBC Holdings (HSBA)