HSBC Holdings (0005.HK) announced Sunday that it has chose to keep its headquarters in Britain, following a review into a potential move that could have shifted the group’s base to Hong Kong.
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In a statement, HSBC said that London had an “internationally respected regulatory framework and legal system” and added that it also was “home to a large pool of highly skilled, worldwide talent”.
HSBC presented a London headquarters and Asia focus as “the best of both worlds”, after its board spent 10 months weighing how regulators, governments and tax officials in the world’s biggest financial centers might treat the bank now and in decades to come.
A move by Chancellor George Osborne to make reforms to the banking taxation system, reducing HSBC’s long-term bills, will also have incentivised the bank to stay put. “In fact, United Kingdom has (also had) riots recently”, Wong told the Post in a telephone interview.
HSBC stressed it remained committed to its Asia “Pivot” strategy under which it plans to invest more into China’s Pearl River Delta, an industrial region of more than 42 million people north of Hong Kong which already accounts for half of HSBC’s China revenues.
In a statement, it said the decision to remain in London was unanimous.
“Tiananmen Square was a huge event”, David Kynaston, co-author of The Lion Wakes: A Modern History of HSBC, said during a book reading in Hong Kong past year. As a result, HSBC’s payment has more than doubled since 2012.
Peter Wong Tung-shun, the Asia-Pacific chief executive of HSBC Holdings, told the South China Morning Post on Monday the decision not to transfer the headquarters to Hong Kong was based on regulatory and business development concerns, and not the riot dubbed the ‘fiashball revolution’.
A Treasury spokeswoman said: “We welcome HSBC’s decision”. A slowdown in China, which administers the former British colony, and fresh questions over the economic management of the world’s most populous country would have counted against Hong Kong. Chinese financial regulation is still evolving and can be unpredictable. HSBC didn’t address the possibility in its statement Sunday. In the recent market turmoil, China curbed some foreign banks’s activities in order to help control its currency prices and stanch capital outflows.
During its review, the bank reportedly looked at bases in Hong Kong, Singapore, the USA and Frankfurt.
The lender – which generates 80 per cent of its profits in Asia – has complained bitterly that it has been unfairly penalised by the tax because of the sheer scale of its global operations.
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The group has conducted that review every three years, until now; the board decided it would not be necessary to continue doing so, saying it would “only revisit the matter if there is a material change in circumstances”. Paris was considered for its central role in the European Union’s coming banking union, a work in progress that should streamline bank regulation and oversight across the eurozone.
