HSBC has announced that it will remained headquartered in the UK following a unanimous decision by its board. The company has been considering its domicile for the last year, and a move to Hong Kong had been mooted.
In a move that will have been a key factor in HSBC’s decision, George Osborne tweaked the banking levy in last year’s summer budget, to transition from a tax levied on global assets to one levied on UK profits. For a bank with large global operations like HSBC, this is a much more favourable arrangement. Laith Khalaf, Senior Analyst, Hargreaves Lansdown: ‘HSBC’s decision is a vote of confidence in London as a financial centre. 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. Hong Kong has probably also waned somewhat in its appeal as an alternative home, following the Chinese government’s panicky interventions in the stock market over the last year.
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. The Treasury will be doubly pleased that HSBC has not only decided to stay, but has also ditched the regular review of its headquarters conducted every three years. HSBC will still retain a focus on growing its business in Asia, but the bank will do so from what it considers to be a more solid base in the UK.’
