It seems being headquartered in London hasn’t been such a burden for HSBC. Today the bank said its profits in the six months to 30 June were up 10% to $13.6bn (£8.7bn), while revenues were up 5.8% to $32.9bn.
The news comes despite a reputational hiccough in February, when its Swiss private bank was accused of helping wealthy clients dodge tax. Chief exec Stuart Gulliver and two other bosses were hauled over the coals by a ruthless parliamentary committee, but today’s results suggest that did little to dampen HSBC’s performance. That’s not to suggest successive scandals haven’t been costly though – it has set aside another $1.1bn for legal settlements in the last six months, plus a further $137m for PPI claims in the UK.
Like most major banks, HSBC is currently going through plans to make itself leaner and more profitable. Last month it set out plans to ditch tens of thousands of job and it’s also set to ‘pivot’ its focus towards Asia. The ‘World’s Local Bank’ still has operations all over the world but is increasingly focused on rapidly growing markets in the Far East. Today it confirmed it had agreed a deal to sell its Brazilian arm to Bradesco for $5.2bn and plans to get rid of its Turkish arm too.
That yet again begs the ‘million dollar question ‘of what its plans are for the UK. Its newly-ringfenced British retail bank will be shifting its headquarters to Birmingham by 2019 and is expected to be renamed Midland Bank, after the brand HSBC acquired in 1992. But the future of HSBC’s group HQ is less certain.
The board is currently contemplating leaving London in favour of Hong Kong or Singapore (or perhaps even Jamaica?) and plans to report on its decision at the end of this year. Government moves, including the departure of FCA chief Martin Wheatley and reforms to the bank levy, have been seen as attempts to keep the bank rooted, but there’s no sign they have scotched plans for a departure.
That’s not great news for London’s arguable status as the world’s financial centre but it could make sense for HSBC. The global centre of economic activity is making an unmistakable shift east and HSBC’s operations in the Americas are small fry when compared with what it’s got going on in China and South East Asia. Profit growth or no profit growth, HSBC will need some serious convincing if London wants it to stay put for much longer.