HSBC bank stays in London, snubbing Hong Kong

LONDON — Europe’s largest bank HSBC said Sunday it would remain headquartered in Britain, rejecting a move to Hong Kong, despite concerns about increased regulation in the UK and a possible split from the EU.

The Hongkong and Shanghai Banking Corporation said London’s many advantages meant it was “ideally positioned” to provide a home base.

It made no reference to growing fears in Hong Kong that the city’s freedoms are being eroded by an increasingly influential Beijing, a trend observers say could damage its status as a freewheeling finance hub.

The bank began its review of where to put its headquarters in April last year, two weeks before a British general election, amid growing calls for a crackdown on a banking sector seen by many voters as feckless.

But after almost a year, during which it reportedly sought advice from former US Secretary of State Henry Kissinger, amongst others, the board unanimously decided to stay put.

“London is one of the world’s leading international financial centers and home to a large pool of highly skilled, international talent,” the bank said in a statement.

“It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC.”

Investors cheered the decision, with the bank’s Hong Kong-listed stock rising more than three percent by the lunch break.

Bank chief executive Stuart Gulliver said the final choice had been between Britain and Hong Kong, although the review had also reportedly considered Germany and the United States.

The British government has pledged to hold a referendum on membership of the European Union, which supporters say is vital if London is to continue to thrive as a financial center for the continent.

In the run-up to HSBC’s decision, some had argued that a Britain outside the EU would be less attractive to big business.

Hong Kong ‘pivotal’

While the uncertainty may have counted against London, slowing growth in China — for which Hong Kong acts as an important gateway — has made the former British colony less attractive in recent months.

Hong Kong is semi-autonomous, with an agreement that its way of life — and freedoms unseen on the mainland — must be protected for 50 years.

But the recent disappearance of five Hong Kong booksellers known for titles critical of Beijing has exacerbated worries that those freedoms are being eroded.

HSBC said that “Asia remains at the heart of the group’s strategy,” and that the bank would put particular emphasis on investing further in China’s Pearl River Delta and Southeast Asia, with Hong Kong playing a “pivotal” role.

A UK finance ministry spokeswoman said the decision was “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 Confederation of British Industry (CBI), a big business lobby, also welcomed the decision.

“We want to have truly global companies, major employers like HSBC, headquartered here,” she said.

The review “emphasizes the need for the UK to continuously stay competitive on regulation, tax and talent,” she added.

The Asia-focused bank’s review of its headquarters highlighted concern about government policy to ring fence British banks’ retail operations to protect them from their investment divisions.

The board had “asked management to commence work to look at where the best place is for HSBC to be headquartered” amid “regulatory and structural reforms”, HSBC chairman Douglas Flint had said in a statement.

HSBC has been based in Britain since 1992 when it took over Midland Bank and shifted its headquarters from Hong Kong to London.

It was founded in Hong Kong and Shanghai in 1865 and 48,000 of its 257,000 global staff are in Britain.

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