HSBC considers moving headquarters out of U.K.
HSBC has launched a review of whether it should move its headquarters out of Britain, citing regulatory and structural reforms in the wake of the financial crisis.
The announcement comes two weeks before parliamentary elections May 7 and would threaten London's reputation as a key financial centre.
Formed in Asia as Hong Kong Shanghai Bank, HSBC is currently Europe's biggest bank with holdings around the world. This year it has been at the centre of a scandal over advising its clients on how to hide assets in its private bank to evade the taxman.
The bank also paid $2.4 billion in fines and settlements in relation to foreign exchange manipulation and errors in its selling of payment protection insurance. That has affected the bottom line.
It announced it would "look at where the best place is for HSBC to be headquartered in this new environment."
"The question is a complex one and it is too soon to say how long this will take or what the conclusion will be; but the work is under way," the bank said.
Hong Kong reaction
The bank said nothing about where it might move, but the obvious contender is Hong Kong, where news that it may be moving was welcomed strongly.
The Hong Kong Monetary Authority issued a statement saying it would take a "positive attitude" to an HSBC relocation and noting HSBC's "deep historical links" with the territory.
Britain taxes HSBC on its global balance sheet and it's tax levy is expected to rise to $1.5 billion this year, up from $1.1 billion last year.
Prime Minister David Cameron, in the midst of an election campaign, announced plans in the budget to increase the bank levy from 0.156 per cent to 0.21 per cent. He declined comment on HSBC's announcement.
However, the opposition Labour party has promised even higher taxation for banks.
In a speech to investors on Friday, HSBC Chairman Douglas Flint pointed to the threat of Britain withdrawing from the European Union as an additional factor in the bank's decision, calling it a source of "economic uncertainty."
HSBC stock rose three per cent in London trading after its announcement.
