HSBC has told its biggest shareholders that it is preparing to quit London in a shock move that the bank has revealed to key investors is now "more likely than not".
The loss of HSBC's headquarters in London, although threatened for months because of the increase in financial regulations, would be a severe blow to the Coalition
Britain's biggest bank, which has been headquartered in the capital for 19 years, warned key investors that last week's disappointing full-year results have made arguments for shifting HSBC's domicile to Hong Kong "overwhelming".
The shareholders have been surprised by the swift gear-change in HSBC's review of its domicile but some have already told the bank that they would support the move.
The loss of HSBC's headquarters in London, although threatened for months because of the increase in financial regulations, would be a severe blow to the Coalition which, despite some of its 'banker bashing' rhetoric, is relying on a private-sector-led recovery.
Last week £6bn was wiped from the value of HSBC's shares as the bank admitted it had suffered surging costs which had fundamentally undermined its targeted return on equity.
Shares in the bank plunged 4.7pc to 678p after it revealed pre-tax profits of $19.1bn (£11.7bn) $1bn less than analysts had expected.
The bank said operating expenses had soared to $37.7bn a rise of 9.6pc from the previous year.
the Government's banking levy, recently increased by the Chancellor, means that the bank will ultimately pay out as much to cover the tax as it gains in profit from its UK businesses.
Iain Mackay, finance director of HSBC, blamed the bonus tax in Britain and France and the large swathes of new bank regulations for the higher costs. Senior figures at the bank have also pointed out that the Government's banking levy, recently increased by the Chancellor, means that the bank will ultimately pay out as much to cover the tax as it gains in profit from its UK businesses.
Last week the bank said that the return on equity target of 15pc to 19pc was no longer viable. Mr Mackay said higher capital requirements demanded by UK regulators and the lower prospective returns had led to the target being abandoned.
Britain's capital requirements for the UK's leading banks are now the toughest in the world and, with the introduction of the Basel III regulations, the bar is expected to go even higher.
A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.
Rantburg was assembled from recycled algorithms in the United States of America. No
trees were destroyed in the production of this weblog. We did hurt some, though. Sorry.
