Responding to an investor in Hong Kong, Douglas Flint, chairman of HSBC, said that: “We are beginning to see the final shape of regulation, the final shape of structural reform and as soon as that mist lifts sufficiently, we will once again start to look at where the best place for HSBC is.”
Shareholders are expected to press the bank on a change of domicile, as rising bank levy costs have hit the bottom line.
The bank levy has been hiked eight times since the Government introduced it in 2010, ensuring that the coalition’s corporation tax reductions could not be seen as a handout to the banks.
Last year HSBC paid £750m in bank levy taxes, the most of any UK bank. Stuart Gulliver, HSBC’s chief executive, said that the lender is committed to increasing its dividend, but that rising taxes had limited the amount of money available for this purpose.
HSBC traditionally reviewed its domicile every three years. In 2012 Mr Gulliver postponed the process “indefinitely”, preferring to wait for more details of post-crisis regulation before making the decision.
But fears that either Labour or the Conservatives could further damage the bank have led investors to pile more pressure on HSBC management. Four years ago it declared that the arguments for shifting to Hong Kong were “overwhelming”.
Standard Chartered, which also does much of its business in Asia, has been particularly hard hit by the bank levy increases. It has faced calls by its second largest shareholder, Aberdeen Asset Management, to relocate there. Standard Chartered employs around 2,000 staff at its London headquarters.
Richard Buxton, head of equities at Old Mutual Global Investors, said that: “There is a very clear risk that HSBC and Standard Chartered reach a pain threshold where they think it is no longer worth staying in the UK.”
Last month Nigel Wilson, chief executive of Legal and General warned that further increases in bank levy could spark an exodus from London. The tax is “a move which ultimately risks forcing banks to relocate outside the UK,” he said, writing for The Telegraph.
BBA response to bank levy
© The Telegraph
Hover over the blue highlighted
text to view the acronym meaning
over these icons for more information
No Comments for this Article