BANKING giant HSBC Holdings has decided to keep its headquarters in the UK, rather than moving the nerve centre to its main profit-generating hub Hong Kong after a 10-month review.
HSBC said directors had made the unanimous decision to keep the headquarters in London in a move that the Government said provided a vote of in its handling of the economy.
The decision removed a threat to London's status as a global financial centre, which has been in question since the financial crisis of 2007-09 amid tougher regulation and rising costs.
Some investors had encouraged HSBC to consider leaving the UK, partly because of a tax on banks' global balance sheets brought in after the financial crisis which had cost it $1.1 billion (£0.8bn) in 2014.
In November Standard Life said it would support HBSC if the bank decided to abandon the City and move its headquarters to Asia or the US.
The Edinburgh-based giant’s fund management arm said HSBC was being put at a competitive disadvantage by ever-increasing capital requirements.
The comments came four months after George Osborne announced he would halve the levy. In a move that provided significant help for HSBC, the chancellor said the levy would no longer apply to the overseas assets of British banks.
HSBC denied the suggestion it had used the threat of moving to force the UK government to rein in the tax.
"We had no negotiation with the government," Glasgow-born chairman Douglas Flint told BBC radio yesterday. "The government was very well aware of our view, indeed the view of many other people who commented on it (the bank levy), but there certainly was no pressure put on, or no negotiation".
Hugh Young, managing director of Aberdeen Asia Management, another prominent investor in HSBC, described the tax concession as a good move.
“Until the UK government started attacking the likes of HSBC, they didn't have any desire to move,” said Mr Young.
However, he said leaving London would have been a huge move for HSBC.
Analysts estimated the cost of moving out of London at between $1.5 billion and $2.5 billion.
The appeal of moving the headquarters to Hong Kong may have faded in recent months.
Shares in HSBC have fallen more than 30 percent from last April when the group began its headquarters review, hit by China's flagging economic growth and market turmoil.
HSBC, short for Hongkong and Shanghai Banking Corp, said Asia remains at the heart of the group’s strategy.
However, Hong Kong may have lost the chance of luring back HSBC to its birthplace for years.
HSBC said its board had decided it is not necessary to continue the previous practice of
reviewing the location of the headquarters every three years. It will only
revisit the matter if there is a material change in circumstances.
Chief executive Stuart Gulliver said: “Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders.”
The bank described London as one of the world's leading international financial centres and home to a large pool of highly skilled, international talent.
It has signalled confidence in Scotland as a centre of banking talent and a market for its services in recent months.
The bank employs around 3,700 people in Scotland.
In October HSBC said it planned to open a third big office in Edinburgh, where it has around 1,200 staff working in areas such as investment administration.
The bank’s chief executive in Scotland, Alison McGregor, described Edinburgh as a dynamic city with a strong financial services industry and a highly skilled workforce.
HSBC has opened corporate and commercial banking centres in Glasgow, Edinburgh and Aberdeen in recent years.
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