Today (15 February) HSBC has announced its board of directors has concluded a review of the best location for the headquarters of the group has decided it should remain headquartered in the UK.
The bank’s bosses stated the decision of the board to stick with the UK was unanimous.
According to HSBC’s announcement, London remains ideally positioned to be the home base for a global financial institution such as HSBC because it is one of the world’s leading financial centres.
Despite the decision, Asia will remain at the core of the group’s strategy. In its investor update in June 2015, HSBC announced a ‘Pivot to Asia’ as a core part of its strategy.
As such, the group is putting particular emphasis on investing further in the Pearl River Delta and Asean region, reflecting increasing shifts in global trade and capital flows to and from Asia, in respect of which Hong Kong will play a pivotal role.
Additionally, the announcement stated the UK itself is also positioned to be the leading western financial centre supporting the internationalisation of the renminbi, is growing its trade and investment flows with China, and is building co-operation in key areas of infrastructure financing, ‘green’ bond financing and mutual access to traded markets.
According to the group, HSBC is actively involved and a leader in all these areas.
The review process evaluated potential jurisdictions against various criteria, including the scale of existing HSBC presence, robustness of the regulatory environment, economic importance, future growth and financial impact.
HSBC’s board decided it is not necessary to continue the previous practice of reviewing the location of the group’s headquarters every three years, and will only revisit the matter if there is a material change in circumstances.
HSBC group chairman Douglas Flint said: “As we evaluated jurisdictions against the specified criteria, it became clear that the combination of our strategic focus on Asia and maintaining our hub in one of the world’s leading international financial centres, London, was not only compatible, but offered the best outcome for our customers and shareholders.
Stuart Gulliver, group chief executive, added: “Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders.
“The completion of this review closes out one of the 10 strategic actions we set out at our Investor Update last June. My colleagues and I remain totally focused on completing the other nine actions.”
John Thanassoulis, professor of financial economics at Warwick Business School, commented: “The question is, has the government created an environment in which the balance is pushed too far towards the banks?
“Systemic risks can materialise quickly. For example announcing stamp duty changes six months in advance risks creating a mini property price bubble in exactly the area the FPC cited as a risk: buy-to-let.
“The government might not realise how powerful they are; or perhaps how sensitive regulators are in setting to avoid the fate of the former head of the FCA.”
ruth.gillbe@ft.com
