HSBC’s bosses apologised on Monday to shareholders for activities in the bank’s Swiss operations and signalled that the London-based business may consider whether it should remain headquartered in the UK.
Stuart Gulliver, chief executive of Britain’s biggest bank, apologised for the conduct of the bank following the revelations in the Guardian and other publications that it had assisted customers in dodging taxes.
Gulliver was speaking in Hong Kong, where the bank was holding an informal meeting with shareholders before its annual general meeting in London, when it is expected that the Swiss scandal, executive pay and the domicile of the bank will be questioned by investors.
In Hong Kong, investors asked about the location of HSBC, which has been in based in London since 1993, after its acquisition of Midland Bank. It was founded in Hong Hong in 1865 and still has extensive operations there.
The bank has traditionally reviewed its head office location every three years but has delayed the next review indefinitely in the face of regulatory changes being introduced by the UK’s coalition government. But Douglas Flint, HSBC’s chairman, told the Hong Kong meeting that the moment may be approaching for the postponed assessment to take place.
“We are beginning to see the final shape of regulation, the final shape of structural reform and as soon as that mist lifts sufficiently, we will once again start to look at where the best place for HSBC is,” said Flint, in remarks reported by Bloomberg.
The bank – along with others based in the UK – is being required to ringfence its high street business from its investment banking operations to comply with the reforms set out by Sir John Vickers in his review of banking. The bank is relocating 1,000 staff to Birmingham where it intends to put the headquarters of its ringfenced operation.
The bank’s shareholders are said to be questioning its London headquarters in Canary Wharf because of George Osborne’s bank levy, which cost HSBC £750m last year. The chancellor’s levy is calculated on the size of a bank’s balance sheet. To comply with global rules, banks such as HSBC are also being required to hold more capital.
Standard Chartered, another bank headquartered in London but with much of its activities outside the UK, is also facing questions from shareholders. “There is a very clear risk that HSBC and StanChart reach a pain threshold where they think it is no longer worth staying in the UK,” Richard Buxton, head of equities at Old Mutual Global Investors, told Reuters.
The publication of leaked files about the accounts of customers of HSBC’s Swiss banking arm between 2005 and 2007 has put pressure on Flint and Gulliver, who have both appeared before committees of MPs to explain the tax avoidance advice that was offered.
Flint could be replaced as chairman in the coming years by one of the new non-executives that the bank is currently recruiting to overhaul its board. The bank has promised shareholders it will break with tradition and appoint its next chairman from outside its ranks.
This article was written by Jill Treanor, for theguardian.com on Monday 20th April 2015 20.11 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010