HSBC proclaims that the world is its oyster.
HSBC Holdings Plc, less than two weeks before Britain’s general election, said it’s reviewing whether to move its headquarters out of the country because of rising tax and regulatory costs.
A move to Hong Kong, viewed by analysts as the bank’s most likely destination should it relocate, would unpick a structure that’s existed since the Hongkong and Shanghai Banking Corp. acquired Britain’s Midland Bank Plc in 1992. A transfer should cost no more than $1.5 billion because HSBC still has a base in the former British colony, said Chirantan Barua, an analyst at Sanford C. Bernstein Ltd. in London.
“The work is underway,” Chairman Douglas Flint told shareholders at the bank’s annual meeting in London on Friday. “The question is a complex one and it is too soon to say how long this will take or what the conclusion will be.”
“They may not like the U.K., but I’m not sure there’s exactly going to be a raft of people queuing up to have them” because of the size of HSBC’s $2.6 trillion balance sheet, said Edward Firth, head of European bank research at Macquarie Group Ltd. in London. “Hong Kong is the only serious possibility.”
In a statement, the Hong Kong Monetary Authority noted what it called HSBC’s “deep historical links” and said it would take a “positive attitude” should the lender decide to move.
Finance Director Iain Mackay said in an interview: HSBC won’t just look at Hong Kong, but other countries with a strong regulatory framework including Canada, the U.S., China, Australia, Singapore, France and Germany.
HSBC also said it’s concerned about Britain’s potential exit from the European Union.
Standard Chartered, another British bank that like HSBC makes most of its profit in Asia, is also being urged by investors to relocate because of the cost of being in London. The U.K. levy cost Standard Chartered $366 million last year, accounting for about 9 percent of its $4.2 billion of pretax profit.
