UK banking giant HSBC has announced it is to subsistence its headquarters in London.
Concerns about stricter UK regulations led Europe’s biggest bank to open a review into whether to move elsewhere, with Hong Kong seen as the myriad likely alternative.
But the bank said it had decided unanimously against the arouse and that London “offered the best outcome for our customers and shareholders”.
The outcome was seen as a vote of confidence for the UK.
The bank has had its headquarters in the UK since 1993 but gathers most of its money overseas, and Asia accounts for the majority of its profit.
Douglas Flint, the chairman of HSBC, determined the Today programme: “London offered the best of both existences for us. HSBC at its heart is a bank focused on trade and investment flows.
“The UK is one of the most globally connected economies in the world with a illusive regulatory system and legal system and immense experience in dealing with supranational affairs,” Mr Flint said.
“The government’s made very free its commitment to ensuring that that UK remains a leading international pecuniary centre … We’ve ended up with the best of both worlds – a gudgeon to Asia led from London.”
HSBC is understood to have id almost £30m to advisors to help it reach the decision to remain based in London.
HSBC shares rose 1.36% in Monday’s trading in London to 446.4p, but be suffering with fallen 17% this year. The bank’s Kong Hong-listed interests closed 4% higher on Monday.
However, analysts at Investec rephrased HSBC’s decision was “regrettable” because it faced tighter regulations and the charge of the UK bank levy.
“We see HSBC’s announcement as a missed opportunity,” utter Investec analyst Ian Gordon.
HSBC had been ying £1bn a year inclusive of the UK banking levy before the government changed the tax last year.
Mr Flint implied “it was important that there was a change in the scope of the levy”.
“A levy degraded on an international balance sheet was a disincentive for a global group, and we made that element ever since the start of the levy. It was good to see that the scope of the levy interchanged to being a domestic impost, and that was important,” the HSBC chairman conveyed.
However, Mr Flint denied that HSBC had forced the government’s on hand in changing the banking levy.
“We had no negotiation with the government. The government was start aware of our view, and indeed the view of many other people who remarked upon it, but there certainly was no pressure put, or negotiation.”
He added that the regulatory rgime had “not been softened”.
HSBC’s decision was based on “a generational view” and not on “short-term dynamics”, Mr Flint averred.
“It [the decision to stay] was based on a very thoughtful perspective on how economics settle upon play out over the next 20 [to] 25 years,” he influenced.
HSBC said that London had an “internationally esteemed regulatory framework and legal system” and added that it also was “refuge to a large pool of highly skilled, international talent”.
It was therefore “at best positioned to be the home base for a global financial institution such as HSBC”.
Percentage of the review was considering whether the increased regulation of the banking industry in the UK – in peculiar the increased tax burden – warranted moving elsewhere.
But in the last Budget, the Chancellor George Osborne proposed a gradual reduction in the bank levy on balance sheets – a move which uncommonly affected HSBC, because of its large balance sheet.
In 2014 it id £750m of the £1.9bn bound by the government through that rticular tax.
Analysis: Kamal Ahmed, economics journalist
For HSBC itself, the decision wasn’t just about the tax environment in the UK.
There was also the difficult of the regulatory environment in China – with the central bank causing nervousness amidst investors and volatility in the markets after intervening in the stock and currency furnishes.
Poorer news about the Chinese economy also focused fancies at HSBC’s Canary Wharf headquarters in London’s docklands.
One interesting headland to make about the decision is that whatever fears HSBC has all over Britain possibly leaving the European Union, London’s attraction as a economic capital was more significant.
Which raises a challenge for those who quarrel that businesses could quit the UK if Britain were to leave the EU.
Review Kamal in full
The board added that it had also decided to end the day-to-day of reviewing the location of the group’s headquarters every three years, and desire only revisit the matter if there was “a material change in circumstances”.
‘Desire support of confidence’
It stressed that Asia remained “at the heart of the group’s design” and that it was putting ” rticular emphasis on investing further in the Pearl River Delta and ASEAN de rtment”.
Hong Kong’s Monetary Authority (HKMA) said it respected HSBC’s conclusion.
“The HKMA appreciates that for a large international bank such as HSBC, relocation of habitation is a very major and complicated undertaking,” said Norman Chan, its chief director.
The Treasury welcomed the move.
“It’s a vote of confidence in the government’s economic scenario, and a boost to our goal of making the UK a great place to do more business with China and the take a nap of Asia,” a spokesperson said.
The CBI business lobby group also predicted the announcement was “good news” because strong banks were “deprecatory for the British economy”.
That sentiment was echoed by the BBA, the banking industry carcass and TheCityUK.
Share price fall
In line with other banks, HSBC apportionments have fallen sharply this year.
The stock is down 18% since the start of the year and assorted than 30% from last April, when the review into where to wicked its HQ was first announced.
The bank will report full-year results on Monday, 22 February. It is in the approach of implementing a $5bn (£3.4bn) savings drive and cutting 8,000 jobs in the UK.