After 10 months of prevarication, which had the City of London and the British government fretting, Europe’s biggest bank – HSBC Group – has finally decided to keep its headquarters in London instead of moving them to Hong Kong, or anywhere else.
HSBC’s decision, believed to be unanimous, gives a timely morale boost to the battered and scandal-plagued London banking sector and will help keep Britain’s capital as one of the Top 3 global financial centres along with New York and Tokyo. This move proves that international organisations of this colossal size need not be too worried about the outcome of the UK’s forthcoming EU Referendum.
As BRIC Plus News predicted in our story on the political consequences of North Korea’s rocket launch in East Asia a fortnight ago: “Europe’s largest bank has been largely thinking of moving to Asia, where it earns 80% of its profits, pushed by Britain’s levy on bank assets and uncertainties over Brexit. However, maybe they have found bigger uncertainties to avoid and will stay in London.”
HSBC chief executive Stuart Gulliver said of his bank’s staying put: “London is one of the world’s leading international financial centres and home to a large pool of highly skilled, international talent, and it remains therefore ideally positioned to be the home base for a global financial institution such as HSBC.”
Since the international group threatened to pull out of London and go to Asia, the UK’s Chancellor of the Exchequer George Osborne has announced some bank-friendly tax relief, such as halving the levy on bank assets and no longer applying it to the overseas property of British banks.
Analysts estimated HSBC’s move out of London to Hong Kong would cost between $1.5bn (£1bn) and $2.5bn (£1.7bn), a price that might not be worth it anymore after these changes. However, the British Government has denied giving any sweetheart deals as a desperate response to HSBC’s threat of leaving the country, but it has agreed that they were part of efforts to help to keep Britain an attractive place for banks.
HSBC’s announcement has come in a particularly sensitive week for the UK politically, due to the EU summit on Thursday to re-negotiate Britain’s EU terms of membership. Whatever happens in Brussels, what is sure for now is that one of the world’s banking giants stays in London.
