By Jonathan Davies

HSBC is facing a criminal investigation into its Swiss tax scandal by French prosecutors.

French authorities conducted an investigation into HSBC's use of its Swiss arm to help hundreds of customers avoid paying tax, and have passed on a file to prosecutors to make a formal decision.

HSBC said prosecutors are now investigating its global holdings company and bail had been set at €1bn (£724m). The previous bail was set at €50m.

“HSBC Holdings plc believes the French magistrates’ decision is without legal basis and the bail is unwarranted and excessive,” HSBC said in a statement. “It intends to appeal and will defend itself vigorously in any future proceedings.”

A spokesperson for the French prosecutors confirmed that the HSBC Holdings Plc was now under formal investigation and that an inquiry could last months. The prosecutors did not disclose the exact charges. On the €1bn bail, the spokesperson said it was part of standard procedure “to ensure payment of any damages and interests that might be decided by any future trial”.