HSBC has decided to keep its headquarters in the UK, ending a 10-month review during which the government made a number of changes seen as encouraging Europe’s biggest bank to stay put.
Here is what analysts and others had to say about the bank’s decision.
A spokesperson for the Treasury:
We welcome HSBC’s decision. They’ve looked carefully and dispassionately at the facts and confirmed that the UK is the best place to base a global business. It’s a vote of confidence in the government’s economic plan, and a boost to our goal of making the UK a great place to do more business with China and the rest of Asia.
Carolyn Fairbairn, director general of the CBI:
Strong banks which can provide the finance businesses need to grow are critical for the British economy. And we want to have truly global companies, major employers like HSBC, headquartered here so this announcement is good news.
HSBC’s thorough review and consideration of other international financial centres emphasises the need for the UK to continuously stay competitive on regulation, tax and talent.
Laith Khalaf, an analyst at Hargreaves Lansdown, the retail investment adviser:
The bank has responded to a big carrot dangled by the chancellor in the form of changes to the bank levy, which will in time make the tax less onerous for HSBC. Hong Kong has probably also waned somewhat in its appeal as an alternative home, following the Chinese government’s panicky interventions in the stock market over the last year.
Moving home is a huge step for a bank: thousands of contracts have to be amended if there is a change in domicile, and the counterparty’s agreement has to be obtained for each and every one. Setting up camp outside the UK was therefore never going to be a decision taken lightly.
The Treasury will be doubly pleased that HSBC has not only decided to stay, but has also ditched the regular review of its headquarters conducted every three years.
Richard Murphy, tax campaigner and sometime adviser to Labour leader Jeremy Corbyn:
Ian Gordon, banking analyst at the stockbroker Investec:
At 10pm last night, HSBC confirmed its (widely expected, but we believe regrettable) decision to remain domiciled in the UK, and thus ‘trapped’ in the European Union. In our view, the statement offers no quantified justification for the board’s decision.
Overall, we see HSBC’s announcement as a missed opportunity. We regard (deferred) ’concessions’ granted by the chancellor last year on the bank levy as inadequate, and see the burden of lead-regulation by the UK as a high price to pay for a bank seeking to compete effectively in international markets, especially Asia. On the other hand, we do acknowledge that uncertainty over the bank’s cost of equity may also have weighed on the board’s decision.
Professor Andre Spicer of Cass Business School said:
The focus on regulation and the current state of the Chinese market has blinded us to other reasons why HSBC chose to stay put - it is likely the collective interests of the UK corporate elite played a role. HSBC is an important part of a network of interlocking directorates; it is also a vital source of revenue for consultants, accountants, lawyers and many others. They probably tried their best to ensure the bank did not move.
Another reason why HSBC probably did not move was that it would be stepping into a completely different business environment. All the evidence shows that when firms move headquarters, they start to copy their new neighbours. This would have meant that HSBC would slowly become more like a Chinese firm. That would have meant a culture which emphasises personal connections over almost anything else and a large role for the state.
We often over-estimate how easy it is for corporations to shift headquarters. If moving house is awful, then moving headquarters is much worse.
Veteran City commentator David Buik:
Mark Boleat, policy chairman at the City of London Corporation:
HSBC’s decision to keep their headquarters in the UK is a significant boost for the City and sign of our competitiveness. London is a leading global financial centre and the fact we have, in HSBC, one of the world’s leading banks based here only backs up that position. All multinational businesses review what the alternatives are across the globe, but today’s announcement is welcome news for financial services in this country.
John Thanassoulis, professor of financial economics at Warwick Business School:
For the UK this is the positive side of the change in emphasis made clear by the chancellor in his Mansion House speech. That is, less confrontational regulation of banks. The speech was followed by the removal of the head of the FCA, by the dropping of the investigations into bank culture, by the weakening of clawback regulations, and today we learn by lower capital requirements than the author of the UK reforms, Sir John Vickers, required.
The question is has the government created an environment in which the balance is pushed too far towards the banks? The government might not realise how powerful they are or perhaps how sensitive regulators are in setting [rules] to avoid the fate of the former head of the FCA.
A spokesman for the British Bankers’ Association:
This decision is a big vote of confidence in the UK, and reflects the government’s decision to ensure the UK remains competitive as a global banking centre. Banking is an internationally mobile industry and as our recent report on competitiveness showed, a number of push and pull factors are weighing heavily in boardrooms across the sector.
We cannot afford to be complacent about the contribution banking makes to the British economy, a sector that employs over half a million people, with two thirds of those jobs based outside of London.
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