HSBC might move its headquarters out of Britain

HSBC might move its headquarters out of Britain

PanARMENIAN.Net - HSBC, Europe's biggest bank, has ordered a review into whether it should move its headquarters out of Britain and potentially back to its former home in Hong Kong, threatening London's reputation as a global hub for finance and investment, Reuters reports.

The announcement from HSBC, founded in Asia but a key part of the British establishment, prompted a warm response from Hong Kong, where it is revered as "The Bank", and silence from Downing Street.

News of the review comes less than two weeks before UK parliamentary elections on May 7 and poses challenges for both Prime Minister David Cameron, who is seeking to return to power, and his Labor party rival, Ed Miliband.

HSBC has been one of the most vocal critics of the new regulations and additional taxes imposed on British banks in the wake of the financial crisis and Chairman Douglas Flint singled out the threat of Britain withdrawing from the European Union in a speech to investors on Friday.

Cameron has pledged to hold a referendum on Britain's membership of the EU if his Conservative party is re-elected and the opposition Labor party seized on HSBC's announcement.

“HSBC is just the latest in a long line of companies warning of the dangers of a re-elected Tory (Conservative) government taking Britain out of the European Union," said Labor finance spokesman Ed Balls, according to Reuters.

Labor’s plans to raise taxes on banks if it comes to power may also influence HSBC. The bank is already expected to pay $1.5 billion under a UK bank levy this year, or about 7 percent of expected profits because it is taxed on its global balance sheet. That charge is up from $1.1 billion last year.

Taxes, tougher regulation and rocketing house prices have already encouraged some banks to move operations out of London, even before the threat of a possible exit from the EU.

Some HSBC shareholders have been urging the bank to consider returning to Hong Kong to cut costs and Friday's announcement prompted a 3 percent rise in its stock, helping to lift Britain's top share index back towards its record high.

"This is more than just saber-rattling, they clearly want the establishment to know that HSBC doesn’t necessarily belong here," said one investor in the bank.

HSBC last reviewed its domicile in 2010, and had said it would re-assess its position in 2015. Analysts put the cost of moving at between $1.5 billion and $2.5 billion.

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