HONG KONG - HSBC Holdings Plc, Europe's biggest bank, has started searching for a replacement for its long-serving auditor, KPMG, after having paid US$81 million (S$100 million) to the accounting firm in fees last year.
This would be the first time since 1991 that the bank has put in place a tender process for its external auditors. Previously, KPMG was re-appointed by the bank's board following the 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 few years, peaking at US$87 million (S$108 million) in 2011, more than three-quarters of which went to paying for audit services. The rest went to paying for taxation and compliance-related services.
The bank appointed a new group head of internal audit in February, with Manveen Pam Kaur replacing Paul Lawrence, who retired after 31 years at HSBC.
HSBC's decision to consider hiring new auditors comes after Britain's Competition Commission said many companies are reluctant to change external auditors because they face significant costs in switching.
In the study, the commission found that 31 per cent of FTSE 100 companies and 20 per cent of FTSE 250 companies have had the same auditor for more than 20 years. It also said it is considering mandating a compulsory rotation of audit firms.
Most large companies pick one of the "Big Four" accounting firms - Ernst & Young, PricewaterhouseCoopers, Deloitte, and KPMG - to audit their books.