HSBC is to keep its headquarters in the UK after a 10-month review during which time the government has made a series of changes regarded as favourable to the bank. Stuart Gulliver, HSBC’s chief executive, said: “Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders.” The much-anticipated decision was announced after a board meeting in London, where the bank has been based since moving its headquarters in 1992 at the time of the takeover of Midland Bank. It comes just as China’s stock market was due to begin trading for the first time after a week’s holiday during which markets elsewhere in the world have been buffeted by fears about the banking sector. Britain’s biggest bank said it would abandon its usual practice of reviewing its headquarters every three years after what it described as an exhaustive process. It did not list all the alternative locations that had been considered but said: “In the later stages of the review, the analysis was narrowed down to the group’s home markets, the UK and Hong Kong, both of which are considered by the board to be world-class financial centres with high quality regulatory regimes capable of hosting a global systemically important bank such as HSBC.” Shares in HSBC, one of the UK’s biggest banks and one of the biggest companies on the FTSE 100, have been trading at levels last seen in 2009, around the time the UK was mired in recession. Last week, Gulliver admitted there was a “very challenging operating environment” for the bank, even as he was forced to embark on an embarrassing U-turn to reverse a staff pay freeze announced only two weeks earlier. The detailed review was announced in April when the bank also warned about the economic risk of the UK leaving the EU. The review, and the warning about Europe, provoked a political debate during campaigning for the general election which led to a majority Conservative government being created in May. Since then the chancellor, George Osborne, has backed away from creating rules intended to toughen up the regime for holding senior bankers to account. He had said he would reverse the burden of proof but has reverted to the more usual system of bankers guilt having to be proven. He also changed the system for taxing banks. A bank levy on balance sheets, which hit HSBC hardest of all the banks, is being scaled back and an eight percentage point corporation tax surcharge on profits is regarded as hitting its smaller rivals harder. Analysts have calculated that the changes mean HSBC will pay £300m to the exchequer – down from £1bn under the previous bank levy system. The headquarters review also took place when the bank was facing scrutiny about tax practices inside its Swiss arm following an investigation by the Guardian and other publications. HSBC said: “The UK is an important and globally connected economy. It has an internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs. London is one of the world’s leading international financial centres and home to a large pool of highly skilled international talent. It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC.” The bank also said the UK was aiming to help the renminbi, China’s currency, gain more international recognition. HSBC, with its presence in China, is keen to develop in this market. The Treasury said: “[HSBC’s decision to keep the HQ in the UK is] a vote of confidence in the government’s economic plan, and a boost to our goal of making the UK a great place to do more business with China and the rest of Asia.”
Further to our note last week, HSBC has now confirmed that is to keep its headquarters in London. Concerns over stricter UK regulations had led the bank to launch a review into whether to move elsewhere, however, it was unanimously decided at a meeting over the weekend that it will remain as London "offered the best outcome for our customers and shareholders". The decision was seen as a vote of confidence for the UK. However, the bank says it may still shift 1,000 investment banking jobs from London to Paris if the UK votes to leave the EU, stating that the referendum in Europe, which may be held in June, will have less of an impact on the "holding company" but may impact the operational activities of the bank.