More damning is the view from David Webb, a former investment banker and commentator on Hong Kong affairs, having lived there since 1991.
Writing on his personal blog, webb-site.com, he warns that Hong Kong is “living on borrowed time”.
“The promise of no change to HK’s legal system for 50 years from 1997 now has only 31 years to run, and HSBC’s decision had to be a long-term choice in that timeframe,” he writes.
“It simply couldn’t take the risk of shifting headquarters to Hong Kong and subsequently being perceived as a ‘Chinese’ bank in its global markets. Its choice of headquarters would also have factored into its global funding costs.
“Paying a UK levy at the reduced rate of 0.05% to 0.10% (from 2021 onwards) was on balance a better choice than the possible higher funding costs of future ‘China risk’.”
Webb points out that threatening to leave the UK, HSBC and fellow Asian-focused peer Standard Chartered were victorious last summer in persuading the UK government to cut a bank levy on global liabilities and instead introduce an 8% surcharge on UK banking profits.
The levy had placed both banks at a competitive disadvantage to global banks headquartered outside the UK, who were not charged on their non-UK business.
Obviously, not everyone on the ground agrees with this assessment of Hong Kong as a Chinese “service centre”, but rather there is a belief that multinationals are increasingly looking east as a base for their operations.
Norman Chan, chief executive of the Hong Kong Monetary Authority, stresses that the territory is the “premier banking and financial hub in Asia”, with all but one of the 30 global systemically important banks operating there.
With a canny unscrambling of the HSBC acronym, he states: “We note that The Hongkong and Shanghai Banking Corporation, which is headquartered in Hong Kong, has all along been the biggest source of profits for the HSBC Group, which will continue to use Hong Kong as the headquarters to grow and develop its business in the Asia Pacific region, including the major business investment plans in the Pearl River Delta.”
