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HSBC to remain headquartered in London

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  • 15/02/2016
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HSBC to remain headquartered in London
HSBC has decided to keep its headquarters in the UK after 10 months of deliberation which saw the bank consider moving its base to Hong Kong.

The bank said its decision, which was held unanimously by its Board, ‘delivered the best of both worlds’ to its stakeholders, with London acting as a ‘pivot’ to business activities in Asia.

The UK bank levy had been a key part in HSBC’s review into relocating its headquarters, but during his July Budget, the Chancellor said the levy would be cut gradually over the next few years to be replaced by an 8% tax surcharge on banks’ profits.

HSBC chairman Douglas Flint told BBC Radio 4’s Today programme that the bank had ‘no negotiation’ with the government over the removal of the bank levy.

“The government was well aware of our view, and indeed the view of many other people who commented upon it, but there certainly was no pressure put, or negotiation.”

HSBC has also managed to escape regulatory scrutiny in recent months, as the Financial Conduct Authority (FCA) said it would not subject the bank to a formal investigation regarding the part it played in helping clients avoid millions in UK taxation through its Swiss private bank. The decision followed shortly after it was revealed that the FCA had decided to halt an industry-wide review of bank culture in the UK.

But Flint denied that the UK regulatory regime had been ‘softened’.

“I think an enormous amount has been learned since the financial crisis and I think the regulatory framework, the supervisory framework has been dramatically and necessarily improved,” he added.

Flint said the decision to stay in the UK was based on a long-term perspective rather than one based on the current economic woes being faced by investors in China.

“It was not based on short-term dynamics, market dynamics, economic dynamics. It was based on a very thoughtful perspective on how economics will play out over the next 20, 25 years,” he said.

“We ended up believing that the combination of a headquarters in London and the pivot to Asia where our major operating activities are, was our best answer.”

Despite its decision, Flint said that an ‘out’ vote on the upcoming European referendum could mean staff in its wholesale bank would need to be relocated to its offices in France.

“We’re lucky in a sense that we have a major bank in France so if we were to leave and if there were to be restrictions, ultimately on the renegotiations of Britain’s position, we have the ability to move people between London and Paris. But as I said our strong economic view is that Britain is better in a reformed Europe.”

HSBC said it will drop its previous practice of reviewing the location of the Group’s headquarters every three years, and will only revisit the matter if there is a material change in circumstances.

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