HSBC considers moving HQ out of UK amid bank clampdown
Global banking giant HSBC on Friday said it had launched a review on whether to remain headquartered in Britain as the country tightens regulation of the sector.
In a surprise announcement less than two weeks before Britain's general election, the Asia-focused bank again highlighted its concern about government policy to ring fence British banks' retail operations to protect them from their investment divisions.
The board has "asked management to commence work to look at where the best place is for HSBC to be headquartered" amid "regulatory and structural reforms", said HSBC chairman Douglas Flint in a statement issued ahead of the bank's annual general meeting (AGM) in London.
"The question is a complex one and it is too soon to say how long this will take or what the conclusion will be; but the work is underway," Flint added.
HSBC, founded in Hong Kong and Shanghai in 1865, employs 48,000 across Britain with many of those based at its London headquarters.
"As I said at our informal meeting in Hong Kong on Monday, we are beginning to see the final shape of regulation and of structural reform, including the requirement to ring fence in the UK," said Flint in an address to shareholders.
"As part of the broader strategic review taking place, the Board has therefore now asked management to commence work to look at where the best place is for HSBC to be headquartered in this new environment."
Responding, the Hong Kong Monetary Authority noted that it "takes a positive attitude should HSBC consider relocating its headquarters back to Hong Kong", where it is the largest bank.
- 'Risk taking' -
Flint insisted that "the global financial system is transparently and markedly stronger than it was before the (2008 financial) crisis and it is essential we are able to utilise this strength to support risk taking and entrepreneurial ambition within the communities we serve".
Deputy Prime Minister Nick Clegg, who also heads junior coalition party the Liberal Democrats, told BBC radio that he hoped HSBC would remain headquartered in Britain despite the government having "significantly tightened the rules and regulations around banking, quite rightly, because the banking system blew up in our face in 2008".
Clegg added that he would make "no apology for clamping down on excessive bonuses, on making sure the banks pay their fair share by paying much, much more tax".
- 'Clear signal' -
Victoria Webb, a dealer at London Capital Group, said the timing of its announcement close to a general election "will be seen as a clear signal to all political parties that business and the City is not happy with the way the electioneering is going" regarding the financial sector.
London's financial sector, referred to as the City, has been embroiled in a number of scandals since the financial crisis, with HSBC currently at the heart of an alleged tax evasion scandal.
"There is no excuse for the tax evasion scandal but governments should make the rules more specific as there are many grey areas about tax rules," said shareholder George Thomson ahead of Friday's AGM meeting.
HSBC is facing a French criminal probe over its Swiss private banking arm after the so-called SwissLeaks allegations it had helped clients hide billions from the taxman.
Documents stolen from its Swiss unit allegedly indicate it helped over 120,000 clients to hide 180.6 billion euros from tax authorities.
HSBC has also said it expects to be fined over its role in the Libor interest-rate rigging scandal, which Thursday resulted in Deutsche Bank being fined $2.5 billion by US and British regulators.
© 2015 AFP