LONDON: Europe’s largest bank HSBC said on Sunday (Monday in Manila) it would remain headquartered in Britain, rejecting a move to Hong Kong despite concerns about increased regulation in the UK and a possible split from the EU.
The Hong Kong and Shanghai Banking Corp. (HSBC) said London’s many advantages meant it was “ideally positioned” to provide a home base.
It made no reference to growing fears in Hong Kong that the city’s freedoms are being eroded by an increasingly influential China, a trend observers say could damage its status as a freewheeling finance hub.
The bank began its review of where to put its headquarters in April last year, two weeks before a British general election, amid growing calls for a crackdown on a banking sector seen by many voters as feckless.
But after almost a year, during which it reportedly sought advice from former US Secretary of State Henry Kissinger among others, the board decided to stay put.
“London is one of the world’s leading international financial centers and home to a large pool of highly skilled, international talent,” the bank said in a statement.
“It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC.”
Investors cheered the decision, with the bank’s Hong Kong-listed stock rising almost 4 percent in afternoon trade.
Chief executive Stuart Gulliver said the final choice had been between Britain and Hong Kong, although the review had also reportedly considered Germany and the United States.
The British government has pledged to hold a referendum on membership of the European Union. Supporters say membership is vital if London is to continue to thrive as a financial center for the continent.
In the run-up to HSBC’s decision, some had argued that a Britain outside the EU would be less attractive to big business.
While the uncertainty may have counted against London, slowing growth in China—for which Hong Kong acts as an important gateway—has made the former British colony less attractive in recent months.
Hong Kong is semi-autonomous, with an agreement that its way of life—and freedoms unseen on the mainland—must be protected for 50 years from the date of the 1997 handover.
But the recent disappearance of five Hong Kong booksellers known for titles critical of Beijing has fuelled fears those freedoms are being eroded.
Hong Kong analysts said the decision to stay in London was expected.
Frances Lun of Geo Securities said the headquarters review had been designed to put pressure on the UK government over regulations.
Jackson Wong of Simsen Securities said the decision to stay put had come down to a matter of reputation, as London was a bigger financial center than Hong Kong.
Wong said recent turbulence in Hong Kong would be a “negative point” for investors and international companies, but would not override the city’s status as a finance hub.
HSBC has been based in Britain since 1992 when it took over Midland Ba nk and shifted its headquarters from Hong Kong to London.
It was founded in Hong Kong and Shanghai in 1865 and 48,000 of its 257,000 global staff are in Britain.