HSBC keeps headquarters in London, rejects move to Hong Kong

Record ID: 114763

  • Title: HSBC keeps headquarters in London, rejects move to Hong Kong
  • Date: 15th February 2016
  • Summary: HONG KONG, CHINA (FEBRUARY 15, 2016) (REUTERS) VARIOUS OF HSBC LOGO ON TOP OF HSBC MAIN BUILDING HSBC LOGO TRAM RUNNING IN FRONT OF HSBC LOGO VARIOUS OF HSBC LION STATUE NAMED STITT HSBC LION STATUE NAMED STEPHEN VARIOUS OF INVESTMENT STRATEGIST AT PRIVATE CAPITAL LIMITED, ENZIO VON PFEIL, SPEAKING VON PFEIL'S HANDS (SOUNDBITE) (English) INVESTMENT STRATEGIST AT PRIVATE CA
  • Embargoed: 1st March 2016 06:31
  • Keywords: HSBC headquarters London Hong Kong China Stuart Gulliver
  • Location: HONG KONG, CHINA
  • City: HONG KONG, CHINA
  • Country: Hong Kong
  • Topics: Company News Markets,Economic Events
  • Reuters ID: LVA00144LN9FX
  • Aspect Ratio: 16:9
  • Story Text: Global banking giant HSBC Holdings announced late on Sunday (February 14) it has decided to keep its headquarters in Britain, rejecting the option of shifting its centre of gravity back to its main profit-generating hub Hong Kong after a thorough 10-month review.
    The decision by HSBC's board, which the bank said was unanimous, gives a boost to London's status as a global financial centre, under threat since the financial crisis of 2008-09 from tougher regulation and rising costs.
    Some investors had encouraged HSBC to consider leaving Britain, partly because of a tax on banks' global balance sheets brought in after the financial crisis.
    But in July, finance minister George Osborne scaled back the tax as part of efforts to help to keep Britain a "highly attractive" place for banks.
    Investment Strategist at Private Capital Limited, Enzio von Pfeil said he believes HSBC's CEO Stuart Gulliver used the possibility of moving to Hong Kong as a bargaining chip in a game of poker with London.
    "(HSBC CEO) Stuart Gulliver as we all know is a fabulous trader, that's where he came from at HSBC. So he's used to playing poker, I used to service traders myself for years so I'm used to this game. And he used Hong Kong I believe very much as a bargaining chip, as a poker chip, to ensure that he got what he wanted for the bank which was massive tax concessions, massive regulatory concessions in London, really to stay there because he wanted to stay in the world's second, or deepest capital market next to, of course, New York. So I think Hong Kong was the poker chip that got him what he ultimately wanted, which was to stay in London but on his terms," von Pfeil said.
    HSBC'S Hong Kong shares opened up 3.4 percent on Monday to HK$49.75 and remained positive during the morning trading session.
    For Hong Kong, the chance of luring Europe's biggest bank back to its birthplace and to the heart of its Asian growth strategy has been lost for now.
    In recent months, speculation grew that the bank would stick to London after gyrations in Chinese markets and concerns about China's growing influence over Hong Kong, which was highlighted by a case of Hong Kong booksellers disappearing and ending up in mainland Chinese custody.
    But there may have been other considerations as well, according to von Pfeil.
    "I think less the booksellers, and I think also less China's cyclical problems which it's currently undergoing with the bad economic time in China. I think that those are arguments that HSBC put forth, but I think that from a strategic standpoint, they're really looking more at the trends and not at the cycles. And so it seems to me as if the current malaise in China and also the fact that the booksellers were taken away here, that played less of a role than our total ineptitude in running Hong Kong itself," von Pfeil said.
    After a 79-day pro-democracy demonstration in 2014 in which key parts of the city's traffic lanes were closed, Hong Kong saw its worst riot in the early morning hours last Tuesday (February 9) when protesters hurled bricks at police and set rubbish bins on fire in Mong Kok district.
    HSBC shares are down more than 30 percent from last April when the group began the review of where to base its headquarters, hit by China's flagging economic growth and its ongoing market turmoil.
    Analysts estimated the cost of moving out of London at $1.5 billion to $2.5 billion, a hefty bill to swallow unless HSBC was going to get clear tax and regulatory advantages.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2016. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register