LONDON / AFP
Europe’s largest bank HSBC said it would remain headquartered in Britain, rejecting a move to Hong Kong despite concerns about increased regulation in the UK and a possible split from the EU.
The Hongkong and Shanghai Banking Corporation said London’s many advantages meant it was “ideally positioned” to provide a home base.
It made no reference to growing fears in Hong Kong that the city’s freedoms are being eroded by an increasingly influential China, a trend observers say could damage its status as a freewheeling finance hub. The bank began its review of where to put its headquarters in April last year, two weeks before a British general election, amid growing calls for a crackdown on a banking sector seen by many voters as feckless.
But after almost a year, during which it reportedly sought advice from former US Secretary of State Henry Kissinger among others, the board unanimously decided to stay put.
“London is one of the world’s leading international financial centres and home to a large pool of highly skilled, international talent,” the bank said in a statement.
“It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC.”
Investors cheered the decision, with the bank’s Hong Kong-listed stock rising more than four percent at closing.
Chief executive Stuart Gulliver said the final choice had been between Britain and Hong Kong, although the review had also reportedly considered Germany and the US.
The British government has pledged to hold a referendum on membership of the European Union. Supporters say membership is vital if London is to continue to thrive as a financial centre for the continent.
In the run-up to HSBC’s decision, some had argued that a Britain outside the EU would be less attractive to big business.
Hong Kong ‘pivotal’
While the uncertainty may have counted against London, slowing growth in China — for which Hong Kong acts as an important gateway — has made the former British colony less attractive in recent months.
Hong Kong is semi-autonomous, with an agreement that its way of life — and freedoms unseen on the mainland — must be protected for 50 years from the date of the 1997 handover. Hong Kong analysts said the decision to stay in London was expected.
Frances Lun of Geo Securities said the headquarters review had been designed to put pressure on the UK government over regulations. “Multinationals have been doing this for a century… to win concessions from the government because they are huge employers and contributors to GDP,” he said.
Jackson Wong of Simsen Securities said the decision to stay put had come down to a matter of reputation, as London was a bigger financial centre than Hong Kong.
Wong said recent turbulence in Hong Kong would be a “negative point” for investors and international companies, but would not override the city’s status as a finance hub.
The bank said “Asia remains at the heart of the group’s strategy” and that it would put particular emphasis on investing further in China’s Pearl River Delta and Southeast Asia, with Hong Kong playing a “pivotal” role.
A British finance ministry spokeswoman said the decision was “a vote of confidence in the government’s economic plan and a boost to our goal of making the UK a great place to do more business with China and the rest of Asia”.
HSBC has been based in Britain since 1992 when it took over Midland Bank and shifted its headquarters from Hong Kong to London. It was founded in Hong Kong and Shanghai in 1865 and 48,000 of its 257,000 global staff are in Britain.