HSBC Holdings' outgoing chairman Sir William Purves yesterday warned that the worsening Asian crisis, particularly in Indonesia where the group has US$1.8 billion of exposure, could force it to increase its provisions for this year and next. 'The board follows a conservative policy . . . but I have little doubt that provisions in 1998 will be somewhat higher than in 1997,' Sir William said, while presiding over the group's annual general meeting on his last day after 12 years as chairman. 'Who knows, it could be higher in 1999 too as economic problems continue to emerge.' Last year the group set aside GBP175 million (about HK$2.21 billion) as a special general provision, and increased its general provisions by GBP116 million to guard against the downturn in the region. 'I believe that the group is better placed than any other to withstand the buffeting that will come,' he said. In the first quarter of this year, Sir William said HSBC had performed in line with its plan, but he acknowledged that fallout from the region continued to emerge. He said the group had so far not had to use any of the provisions it had already made. 'Performance in the first quarter was in line with our plan, with some entities slightly ahead of expectations; however, fallout from the economic downturn in Asia continues to emerge.' Yesterday shares in the group jumped almost 5 per cent in early afternoon trade to GBP16.20. Earlier this week the group's Japanese securities arm, HSBC Securities Japan, was alleged to have breached several trading rules, and has been threatened with fines, but Sir William said publication of the allegations had come as a surprise. He criticised the handling of the incident which he said took place before HSBC had time to finish discussing the matter with Tokyo authorities. 'While still discussing the problem and trying to explain the position, it appeared on Reuters,' Sir William said. He said it was regrettable because it came out just 10 minutes before he was due to host the group's informal shareholders' meeting in Hong Kong. 'I have to say that there is an atmosphere of witch hunt in Japan at the moment . . . we have seen tens, even hundreds of executives from the central bank fired, and even more from the Ministry of Finance,' he added. 'I am very sorry that there should have been a problem there.'