HSBC’s review of whether to move its headquarters out of the UK will be in focus on Monday when it reports its results for the first nine months of the year.
The results will be scrutinised for any update on the bank’s views on whether to remain in London, where it has been based since moving from Hong Kong to facilitate the takeover of Midland bank in 1992.
Britain’s biggest bank caused a political row when it announced in Aprilit was formally reviewing whether to retain its headquarters in Canary Wharf, because the announcement came in the middle of campaigning for the May general election.
Stuart Gulliver, HSBC’s chief executive, has indicated the board will make a decision at the end of the year and has published 11 factors it will consider during the review, which include the government’s tax policy and attitude to financial services companies.
He has already embarked on a plan intended to bolster returns for shareholders that involves cutting 25,000 jobs around the world, including up to 8,000 in the UK, and selling off underperforming international operations.
Since HSBC announced the review – delayed from its usual three-year cycle because the regulatory overhaul – a number of changes have been made. The bank levy has been watered down and replaced with an eight percentage point surcharge on corporation tax, which is regarded as beneficial to HSBC in the longer term. HSBC paid about £700m a year in bank levy, more than other bank, because of the size of its balance sheet.
Clarifications have also been made about the way the rules on ringfencing banks’ high street operations from the riskier investment banking businesses are being operated. Among them is how much influence the parent company would have over the ringfenced bank which housed the high street customers.
Douglas Flint, HSBC’s chairman, told the Financial Times recently that the self-imposed deadline to make a decision by year-end could move.
HSBC is not the only internationally focused bank to report results this week. Standard Chartered is scheduled to report on Tuesday amid speculation that could tap its shareholders for cash to bolster its balance sheet.
The results are the last ones before the Bank of England publishes its annual check-up of banks’ financial health on 1 December. This year’s assessments are focused on international scenarios which are expected to put more focus on Standard Chartered and HSBC than last year’s stress tests.
Standard Chartered’s new boss, Bill Winters, has already halved the bank’s dividend to preserve capital.
