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| The real reason HSBC decided to keep its headquarters in the UK | The real reason HSBC decided to keep its headquarters in the UK |
| (35 minutes later) | |
| HSBC has said it will keep its headquarters in the UK after a 10-month review into whether its should move its base. | HSBC has said it will keep its headquarters in the UK after a 10-month review into whether its should move its base. |
| Europe’s biggest bank was said to be considering a move because of stricter banking rules in Europe following the financial crisis in 2008. | Europe’s biggest bank was said to be considering a move because of stricter banking rules in Europe following the financial crisis in 2008. |
| But after the review – and the loosening of some of new rules for banks - HSBC’s 19-man board voted unanimously to keep their headquarters in London. | But after the review – and the loosening of some of new rules for banks - HSBC’s 19-man board voted unanimously to keep their headquarters in London. |
| The most likely location was thought to be Hong Kong, where the bank earns much of its profits. | The most likely location was thought to be Hong Kong, where the bank earns much of its profits. |
| HSBC was originally headquartered in Hong Kong until a move to London in 1992. | HSBC was originally headquartered in Hong Kong until a move to London in 1992. |
| In April, HSBC didn’t mention that it was worried about the banking levy, which taxes bank’s global balance sheets, but focussed on rules requiring the UK’s banks to “ring-fence” their investment and trading activities from their consumer services. | |
| HSBC chairman Douglas Flint said to investors: | HSBC chairman Douglas Flint said to investors: |
| “We also have to take fully into account the repositioning of our industry being driven by the regulatory and structural reforms which have been put in place post crisis. We are beginning to see the final shape of regulation and of structural reform, including the requirement to ring fence in the UK.” | “We also have to take fully into account the repositioning of our industry being driven by the regulatory and structural reforms which have been put in place post crisis. We are beginning to see the final shape of regulation and of structural reform, including the requirement to ring fence in the UK.” |
| HSBC did talk about the banking levy when it made the decision to stay. | HSBC did talk about the banking levy when it made the decision to stay. |
| “I think what was important was that the Government changed the scope of the levy,” Douglas Flint, HSBC chairman, told the BBC. | “I think what was important was that the Government changed the scope of the levy,” Douglas Flint, HSBC chairman, told the BBC. |
| In June, George Osborne said that the levy on worldwide banking assets would be reduced over six years and stop applying from 2021. HSBC have a relatively small portion of their assets in the UK but were paying £1 billion a year in levy charges. | In June, George Osborne said that the levy on worldwide banking assets would be reduced over six years and stop applying from 2021. HSBC have a relatively small portion of their assets in the UK but were paying £1 billion a year in levy charges. |
| Flint denied that HSBC had forced the Government’s hand. | Flint denied that HSBC had forced the Government’s hand. |
| “We had no negotiations with the government. 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,” he said. | “We had no negotiations with the government. 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,” he said. |
| But analysts said they wouldn’t be surprised if some negotiations had taken place. | But analysts said they wouldn’t be surprised if some negotiations had taken place. |
| David Buik from Panmure Gordon said: “I get the impression that there have been some sensible conversations with George Osborne, the Treasury, BOE and the FCA. There clearly has been some softening of approach by the authorities in their attitude to HSBC.” | David Buik from Panmure Gordon said: “I get the impression that there have been some sensible conversations with George Osborne, the Treasury, BOE and the FCA. There clearly has been some softening of approach by the authorities in their attitude to HSBC.” |
| HSBC could also have been put off by Beijing’s growing influence on Hong Kong – including the worrying detention of Hong Kong booksellers. | HSBC could also have been put off by Beijing’s growing influence on Hong Kong – including the worrying detention of Hong Kong booksellers. |
| A month ago, an HSBC “insider” told Reuters: “The situation in Hong Kong appears to be getting worse. You have to wonder if the city will remain a suitable base for an independent-minded, top global financial institution.” | A month ago, an HSBC “insider” told Reuters: “The situation in Hong Kong appears to be getting worse. You have to wonder if the city will remain a suitable base for an independent-minded, top global financial institution.” |
| “This is a relief for the chancellor,” Gregor Irwin, a former Treasury official and now chief economist at Global Counsel, a London-based consultancy, told Bloomberg. | “This is a relief for the chancellor,” Gregor Irwin, a former Treasury official and now chief economist at Global Counsel, a London-based consultancy, told Bloomberg. |
| “It would have led to questions about his judgment had they left.” | “It would have led to questions about his judgment had they left.” |
| In a statement, the Treasury celebrated HSBC's decision: “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.” | In a statement, the Treasury celebrated HSBC's decision: “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.” |