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HSBC could switch 1,000 banking jobs to France after a Brexit vote HSBC could switch 1,000 banking jobs to France after a Brexit vote
(about 4 hours later)
HSBC could shift 1,000 investment banking jobs from London to Paris if the UK votes to leave the EU, the bank revealed after announcing it was keeping its headquarters in London. HSBC has warned that it could shift 1,000 investment banking jobs from London to Paris if the UK leaves the EU.
HSBC chairman Douglas Flint told the BBC that while the “best answer” was to remain in a reformed Europe, the bank had the ability, in the event of a vote to leave, to “move people between London and Paris”. As the bank announced it was keeping its headquarters in London after a 10-month review, Douglas Flint, the chairman, told the BBC that while the “best answer” was to remain in a reformed Europe, the bank had the abilityto “move people between London and Paris”.
Flint was referring to the bank’s non-ringfenced operations. The ringfenced bank includes HSBC’s high street operations, which are to be headquartered in Birmingham to comply with the new rules that protect taxpayers from having to bail out banks. Flint chaired a board meeting on Sunday night at which the decision was taken not to relocate to Hong Kong – where the bank was based until 1992 when it moved to London to take over Midland Bank.
He said the decision was “based on what will hopefully be a generational view” as he also revealed for the first time how HSBC might respond to a vote to leave in the referendum that could be held in June. The jobs that could move are outside the high street operations and largely in investment banking.
Stuart Gulliver, HSBC chief executive, later told Sky News: “We have 5,000 people in global banking and markets [HSBC’s investment bank] in London and I could imagine that around 20% of those would move to Paris.”
Flint denied suggestions HSBC had lobbied the government to soften the regulatory regime so that it would remain headquartered in London. The bank, which employs 260,000 around the world, 45,000 of them in the UK, is one of the five biggest companies listed on the London stock exchange and the biggest bank in the country.
As well as changes to the tax regime, rules intended to hold individual bankers to account have been eased since HSBC announced the review of its headquarters last April. In his summer budget, George Osborne scaled back the bank levy which, calculated on the size of balance sheets, hit HSBC hardest. Analysts have calculated HSBC will pay £300m to the exchequer – down from £1bn under the previous system.
“We had no negotiations with the government,” Flint said. “The government was very well aware of our view, indeed of the view of many other people who commented upon it, but there certainly was no pressure put, or negotiation.”
Even so, analysts said these changes played a part in the decision by the bank’s board to remain in the UK.
Laith Khalaf, an analyst at investment advisers Hargreaves Lansdown, said: “The bank has responded to a big carrot dangled by the chancellor in the form of changes to the bank levy, which will in time make the tax less onerous for HSBC.”
Among the locations considered by HSBC were the US, Canada and EU countries. But it came down to a choice between the UK or returning to Hong Kong.
Andre Spicer, of Cass Business School, said: “The focus on regulation and the current state of the Chinese market has blinded us to other reasons why HSBC chose to stay put – it is likely the collective interests of the UK corporate elite played a role.”
One City analyst did not welcome the decision to stay put. Ian Gordon, banks analyst at the stockbroker Investec, said it was a “missed opportunity” and left HSBC burdened by the UK regulatory regime.
HSBC is one of the first banks to set out how it will respond to the regulatory changes set out by Sir John Vickers’ Independent Commission on Banking to protect taxpayers from another taxpayer bailout by ringfencing its high street arm from the investment bank.
Vickers, who had warned on Sunday that the Bank of England had watered down the rules on the capital cushion banks must hold to protect against collapse, said HSBC’s decision to stay supported his view for high capital levels.
“Strong capital buffers for ringfenced banks and HSBC’s decision to stay UK-based go hand in hand. You get the benefits of global banks in London without heightened risk to high street banking,” said Vickers.
Related: HSBC to keep its headquarters in LondonRelated: HSBC to keep its headquarters in London
The referendum on Europe, which could be held in June, would have less of an impact on the “holding company” but could impact the operational activities of the wholesale bank, he said.
Stuart Gulliver, the chief executive of HSBC, later told Sky News: “We have 5,000 people in global banking and markets [HSBC’s investment bank] in London and I could imagine that around 20% of those would move to Paris.”
Flint, who chaired a board meeting on Sunday night at which the decision to remain in London was taken, after a 10-month review, told the BBC that HSBC had not forced the government to soften the regulatory regime.
Deciding against a move to Hong Kong - where the bank was based until 1992 when it moved to London to take over Midland Bank - was “based on what will hopefully be a generational view”.
Related: German poll finds one in three firms would leave UK after BrexitRelated: German poll finds one in three firms would leave UK after Brexit
When the bank announced the review in April, it had already published an analysis on Europe pointing to the risk of the UK leaving the EU. HSBC’s decision was welcomed by the Treasury: “It’s 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.”
George Osborne made a series of changes which appeared to help HSBC, backing away from creating rules intended to toughen up the regime for holding senior bankers to account. The employers body, the CBI, said it was a welcome move but that it also “emphasises the need for the UK to continuously stay competitive on regulation, tax and talent”.
He also changed the system for taxing banks. A bank levy on balance sheets, which hit HSBC hardest, is being scaled back and analysts have calculated the changes mean HSBC will pay £300m to the exchequer – down from £1bn under the previous system. A number of bankers have started to speak out on the upcoming EU referendum. Last week, Ross McEwan, chief executive of Royal Bank of Scotland, said that the uncertainty caused by the referendum could “slow down banking”.
Flint denied that the bank’s threat to move its headquarters had forced the government’s hand. “We had no negotiations with the government,” he said. “The government was very well aware of our view, indeed of the view of many other people who commented upon it, but there certainly was no pressure put, or negotiation.”
HSBC’s decision to stay in London has been welcomed by the Treasury: “It’s 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.”
The employers body, the CBI, said it was a welcome move but that its also “emphasises the need for the UK to continuously stay competitive on regulation, tax and talent”.
One City analyst did not welcome the decision to stay put. Ian Gordon, banks analyst at the stockbroker Investec, said: “We see HSBC’s announcement as a missed opportunity. We regard (deferred) ‘concessions’ granted by the chancellor last year on the bank levy as inadequate, and see the burden of lead-regulation by the UK as a high price to pay for a bank seeking to compete effectively in international markets, especially Asia. On the other hand, we do acknowledge that uncertainty over the bank’s cost of equity may also have weighed on the board’s decision,.”
A number of bankers have started to speak out on the upcoming EU referendum. Last week Ross McEwan, chief executive of Royal Bank of Scotland, said that the uncertainty caused by the referendum could “slow down banking”.
McEwan said he had seen no “economic data that suggests we’d be better off out, in the short to medium term”. Barclays chairman John McFarlane has said that the clear majority of members of lobby group TheCityUK, which he represents, “feel that staying in a reformed Europe is the right choice”.
However, the chairman of Lloyds Banking Group, Lord Blackwell, has said Britain’s membership is not sustainable without “significant change”.