HSBC praised the UK for its regulatory framework, “immense” experience at handling complex international affairs and London for its pool of highly skilled talent.
The bank has historically reviewed the location of its HQ every three years.
This latest decision was a choice between Hong Kong and London, but in a unanimous vote by the board of directors, it chose the UK after an assessment of many factors including the quality of the regulator, economic importance, future growth and financial impact.
The group said it no longer deemed the three-year review necessary, and would only revisit the matter if there were a “material change in circumstances”.
Group chief executive Stuart Gulliver said: “Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders.”
Vote of confidence
Laith Khalaf, senior analyst at Hargreaves Lansdown, called it a “vote of confidence” in London as a financial centre, citing the banking levy shifting from global assets onto UK profits as a likely major factor in the decision.
He 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.
“Moving home is a huge step for a bank; thousands of contracts have to be amended if there is a change in domicile, and the counterparty’s agreement has to be obtained for each and every one. Setting up camp outside the UK was therefore never going to be a decision taken lightly.”
Missed opportunity
But Ian Gordon, banking analyst at Investec saw it as a “matter of regret” that the FCA would continue to lead-regulate HSBC.
He said: “Overall, 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.”
Asia commitment
The banking giant said Asia remained at the heart of its strategy.
A statement said: “The combination of being based in one of the world’s leading international financial centres and supporting global growth through an international network linking faster growing and developed markets is compelling.
“Within this, HSBC’s strength in and growing commitment to Asia affords the best opportunity to connect customers to the opportunities that are emerging from the changing pattern of trade and investment activity.”
It also called the UK the leading western financial centre supporting the internationalisation of the renminbi, which would help with its growing its trade and investment flows with China, furthering key development in infrastructure financing, ‘green’ bond financing and mutual access to traded markets.
