UNDER-FIRE banking giant HSBC created a pre-election storm yesterday when it announced that it would consider moving its headquarters out of the UK.
Chairman Douglas Flint told the group’s annual general meeting that it was responding to “regulatory and structural reforms” in the industry in the wake of the financial crisis.
These include, in the UK, the need to separate its investment banking arm from the retail division serving ordinary customers and businesses.
The bank has also been hit by a UK bank levy, which last year cost it £730 million, up £130m from 2013.
HSBC’s announcement sparked a claim that the “regulatory pendulum has swung too far” while Labour seized on remarks by Mr Flint on the uncertainty facing the bank over Britain’s future in the European Union.
Meanwhile, Chancellor George Osborne said “anti-business” policies from Labour threatened to drive companies abroad.
The chairman disclosed the review at the company’s AGM in London, where the board faced a bumpy ride from shareholders over the potential move, as well as on a series of scandals that have dogged the bank.
One investor, Michael Mason-Mahon, said: “Which country are you likely to go to? How many countries have you not committed illegal and criminal behaviour in?”
Mr Flint said it was “essential that we position HSBC in the best way to support the markets and customer bases critical to our future success”.
He added: “We are beginning to see the final shape of regulation and of structural reform, including the requirement to ringfence in the UK.
“As part of the broader strategic review taking place, the board has therefore now asked management to commence work to look at where the best place is for HSBC to be headquartered in this new environment.
“The question is a complex one and it is too soon to say how long this will take or what the conclusion will be, but the work is under way.”
Mr Flint also cited a series of uncertainties, including one that “stands out”, which is Britain’s future in the EU. His remarks come at a time when the Conservatives are pledging an in-out referendum.
He said the bank’s own research indicated that working towards reforms in Europe would be “far less risky than going it alone, given the importance of EU markets to British trade”. The review of where the bank has its headquarters comes amid intense pressure over
HSBC’s Swiss private banking arm, over claims that it helped thousands of account holders hide billions of their assets from tax authorities.
The scandal resulted in Mr Flint and chief executive Stuart Gulliver being ferociously grilled by MPs and apologising for “unacceptable” activities. The bank is under criminal investigation in a number of countries.