24 Apr 2015

HSBC to quit London? The key questions

Britain’s biggest bank HSBC says it is considering moving its headquarters out of London. Why is this on the agenda and how many British jobs are at stake?

Why is HSBC considering a move?

The bank says it is reacting to “regulatory and structural reforms” introduced after the 2008 financial crisis. Of particular concern is the rising bank levy, which is costing HSBC – and other British banks – more every year.

Like other British banks, HSBC is also under pressure to separate its investment banking arm from its retail division, part of the government’s solution to the “too big to fail” scenario that led to the financial crisis.

Then there is the possibility of a British exit from the EU – assuming the Conservatives win the general election and hold a referendum – which is causing concern. This was a point made by the bank on Friday in the midst of the election campaign.

Where might it go?

Shareholders have told the board it should consider a move to Asia, where most of HSBC’s profits are made, with Hong Kong the most likely destination. Another option is New York.

Is it the first time this has been considered?

No, discussions about where the bank should be based have happened regularly in recent years.

Is it the only British bank that may move?

No, Standard Chartered, which has a big presence in Asia, is also considering relocating following the recent rise in the bank levy in George Osborne’s budget from 0.156 per cent to 0.21 per cent.

How many people does HSBC employ?

Across the world, HSBC employs 266,000 people, 48,000 of them in the UK. In March, it said it planned to move its UK head office to Birmingham by 2019, with 1,000 jobs transferred from London.

Why HSBC's threat to leave London is a big deal. Read Siobhan Kennedy's blog

Was HSBC bailed out during the financial crisis?

No, unlike RBS and Lloyds, it did not ask for, or receive, taxpayer support.

Has HSBC always been headquartered in the UK?

No, this has only been the case since 1992. The bank started in Hong Kong as the Hong Kong and Shaghai Banking Corporation (HSBC), but moved to the UK after taking over the Midland.

Hasn’t HSBC been criticised recently?

Yes, in February HSBC was hit by allegations that its private bank in Geneva had helped clients dodge tax.

HSBC apologised to customers and staff, with Chief Executive Stuart Gulliver saying in a full-page newspaper advert that the Swiss bank had been “completely overhauled”.

He added: “The media focus has been on historical events that show the standards to which we operate today were not universally in place in our Swiss operations eight years ago. We therefore offer our sincerest apologies.”

On Friday, Chairman Douglas Flint said “inadequacies in controls” had “allowed unacceptable behaviours to occur undetected”. HSBC had paid a “heavy price” and its reputation had been “damaged”.

The allegations were made by former HSBC employee and whistleblower Herve Falciani, who was interviewed by Channel 4 News in February.

What did HSBC’s bosses know?

Much of the attention has focused on Lord (Stephen) Green, chairman of HSBC from 2005-2010 and a former director of the the bank’s Swiss branch.

He stepped down as chairman a month after becoming a Conservative peer and was made a trade minister by David Cameron in 2011, continuing in this role until 2013.

Confronted by Channel 4 News in March, he said he felt “dismay and a source of deep regret” about what had happened, adding that he had not known about the files of data taken by Herve Falciani.

Is that the other critcism HSBC has faced?

No, like other British banks, it was fined for mis-selling payment protection insurance to customers and rigging the foreign exchange markets.

It was also fined by US regulators for violating anti-money laundering rules.