A couple of weeks before the General Election in May, HSBC dropped a bombshell: it was thinking about moving its headquarters out of London. Hong Kong is the obvious alternative – HSBC was based there for more than a century after all – but reports have now emerged that it’s also considering the US.
Although it makes most of its profits in Asia, Europe’s biggest bank (by assets) is increasingly concerned about the risk of ending up in Chinese hands and falling out with UK and US regulators if it moves to Hong Kong. So it’s now looking at the feasibility of moving Stateside, according to the FT, which cited ‘people familiar with the matter’.
The US is one of the few economies large enough to cope with HSBC’s $2.6tn (£1.7tn) of assets, advisers to the bank told the FT, while American regulation is viewed more favourably (although US regulators do seem to take the opportunity whenever they can to rinse foreign banks over rigging scandals and the like).
HSBC launched its HQ review over concerns about the burden of British and EU taxes and regulation. After the Tories won a majority, chancellor George Osborne duly said he would phase out the so-called ‘bank levy’ and instated an 8% surcharge on profits instead.
‘The UK’s made some changes to the tax framework which we think are positive to the structure of taxing banks in the UK,’ HSBC chairman Douglas Flint said at the time. But he added that he didn’t think they were ‘determinative’.
Flint told the FT yesterday that it was ‘about halfway through the process’ of reviewing its HQ and had ‘prepared the ground by giving presentations to the board on the various aspects, like the regulatory and economic framework.’
‘But we have not had any discussion of the relative merits,’ he added.
The bank has given itself until the end of the year to decide, although it could kick the ball into 2016. Plenty of time, then, for the UK government to risk the wrath of the populace (HSBC did allegedly help clients of its Swiss private bank evade tax, after all) and lovebomb it with more tax cuts.