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Britain
HSCB likely to leave London, move HQ to Hong Kong
2011-03-06
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.

Posted by:

#3  London bankers are scraping by.
Bankers' bonuses set to hit £6bn as David Cameron backs off

With that they can even afford to total a few more Veyrons right off the showroom floor.

And who could forget the $100,000 expense account dinner for 5 of London's finest.
Posted by: Gomez Slinese2141   2011-03-06 16:10  

#2  And this sort of thing doesn't help.
Posted by: lotp   2011-03-06 15:02  

#1  Classic example of tax and regulate until the business entity either closes or leaves.
Posted by: tipover   2011-03-06 11:01  

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