Shareholders expect banking giant HSBC to keep its headquarters in London
Major investors in HSBC think the bank is more likely to remain headquartered in London following changes to the political and regulatory landscape since the bank announced a review nine months ago.
Richard Buxton, chief executive of HSBC shareholder Old Mutual Global Investors, told Morning Wire: “I do think the mood music changed materially after the election, the budget, and the Prudential Regulation Authority clarity on bank capital.”
In July the chancellor George Osborne announced in the summer budget the annual levy banks pay on their balance sheets would be gradually phased out as an eight per cent surcharge on their profits was introduced, meaning global banks would pay less.
Late last year HSBC fears that it could lose control of its UK retail arm under retail bank ring-fencing rules were clarified by the Prudential Regulation Authority, and called “satisfactory” by HSBC chief executive Stuart Gulliver.
Buxton added: “These address HSBC’s concerns, whilst clearly current events in Hong Kong and Chinese financial markets are a timely reminder of some of the risks associated with a move back to Hong Kong.”
Martin Gilbert, the chief executive of top 10 shareholder in HSBC Aberdeen Asset Management, told Morning Wire: “The UK has become more hospitable, the mood has improved and the bank has worked towards that.”
An update is expected when HSBC posts its annual results on 22 February.
A final decision on the review was due to be completed before the end of last year, but the bank indicated in its third-quarter results that the decision would likely be delayed.
Major bond investor and HSBC shareholder Hermes Investment Management agrees that London looks more attractive than it did a year ago.
Filippo Alloatti, banking analyst with Hermes Investment Management said: “The budget and easing the bank levy was a big step in the right direction for HSBC.”