UK’s largest bank HSBC Holdings Plc warned yesterday that the company might be forced to leave the country if the Government decides to adopt all the reforms proposed by the Independent Commission on Banking's (ICB) in September this year.
HSBC is said to be furious at certain ICB proposals that would penalise the bank for having more deposits than loans – a measure they claim allows the bank to be more liquid and safe than other UK banks.
According to HSBC’s Chief Executive Stuart Gulliver, the proposal would punish HSBC's prudent balance sheet, which is more than fully funded by customer deposits. If the commission’s proposals were to be implemented as they stand, HSBC would need to sell about $55 billion of loss-absorbing debt at an annual cost of about $2.1 billion. Coupled with a British bank levy that will cost about $400 million a year for its overseas operations, the bank simply had no choice but to consider its options.
Gulliver though assured the media that the company was prepared to wait until the end of next year before making its final decision, as they weighed up the legislation based on the ICB’s report.
Finance Director Iain Mackay added that, “as more facts become available to us then we will clearly act in the best interests of our shareholders and the board of directors will make decisions recognizing those fiduciary responsibilities.”
Hong Kong would “absolutely” welcome HSBC, along with fellow UK bank Standard Chartered, if they decided to move headquarters to the former British territory, said its CEO Donald Tsang in an interview in September.
While HSBC have always had historical roots with Hong Kong since the company was founded in March 1865, its takeover of Midland Bank in 1993 meant that it was legally required to relocate its world headquarters from Hong Kong to London that year.