HSBC keeping HQ in London instead of moving to HK

Bank also likely to address succession of top two managers by next year

LONDON • HSBC Holdings recommitted its future to London, ending 10 months of deliberations over whether to move its headquarters, after securing concessions from the British government on regulation and taxes.

Europe's largest bank is also expected to address the succession of its top two managers by next year, its chief executive said.

Mr Stuart Gulliver, who has run the bank for five years, told the Financial Times yesterday that he planned to see the "pivot to Asia" strategic plan he announced last year through to its conclusion at the end of next year.

HSBC had said in a statement on Sunday that its board had unanimously agreed on Sunday to continue its 23-year stay in London.

"As we evaluated jurisdictions against the specified criteria, it became clear that the combination of our strategic focus on Asia and maintaining our hub in one of the world's leading international financial centres, London, was not only compatible, but offered the best outcome for our customers and shareholders," chairman Douglas Flint said in the statement.


The HSBC headquarters in London, where the bank will continue its 23-year stay. Also working in London's favour was the deceleration in China's economy, threatening growth in other parts of Asia. PHOTO: EUROPEAN PRESSPHOTO AGENCY

HSBC will also end its practise of renewing its domicile every three years, the statement said.

The decision is a victory for British Chancellor of the Exchequer George Osborne, who made tax and regulatory concessions to large banks despite their poor standing among voters following the 2008 financial crisis.

It also underscores London's status as a global financial hub at a time when it is being undermined by debate over whether Britain will quit the European Union.

"Their default position was always to stay in the UK," said London-based analyst Chris Wheeler at Atlantic Equities.

"They would have needed very strong arguments to leave, given the mountain of legal and regulatory work involved in a move, as well as the political pressure."

The loser is Hong Kong, which Bloomberg Intelligence estimates accounts for 22 per cent of HSBC's assets and generated almost half of the company's pre-tax profit in 2014.

A slowdown in China, which administers the former British colony, and fresh questions over the economic management of the world's most populous country would have counted against Hong Kong.

The Hong Kong Monetary Authority said it respects the bank's decision.

NOT LEAVING

They would have needed very strong arguments to leave, given the mountain of legal and regulatory work involved in a move, as well as the political pressure.''

MR CHRIS WHEELER, a London-based analyst at Atlantic Equities, a US brokerage firm, who said HSBC's "default position" was always to stay in Britain.

Founded in 1865 as the Hongkong and Shanghai Banking Corp, HSBC began debating a shift last April, assessing factors such as taxation, financial regulations and the risk of Britain exiting the EU.

London's appeal grew after last May's election handed full power to the Conservative Party, allowing Mr Osborne to loosen pressure on the finance industry after years when "banker bashing" was a popular political stance.

Also working in London's favour was the deceleration in China's economy to its slowest rate since 1990, threatening growth in other parts of Asia.

This was not the first time HSBC had threatened to leave since its relocation to London in 1993, which followed its acquisition of Midland Bank ahead of 1997's return of Hong Kong to Chinese sovereignty.

The bank complained about its tax bill in 2006 and reviewed the issue again in 2010 after then CEO Michael Geoghegan transferred his office to Hong Kong to focus on expansion in Asia.

A version of this article appeared in the print edition of The Straits Times on February 16, 2016, with the headline 'HSBC keeping HQ in London instead of moving to HK'. Print Edition | Subscribe