Chris Beauchamp, senior market analyst at IG, says Yes.
Fundamentally, HSBC’s residency in London makes sense. The bank may have ambitions in emerging markets, and may have ringfenced its UK operations, but to depart for Asia would seem like an odd move.
It would separate the bank from its peers, who have realised that the geographical benefits of a position in London far outweigh the difficulties created by the banking levy, profits surcharge and increasing regulation. Moving now, when Chinese economic growth is faltering, would seem to be a case of bad timing too – what would have been a sensible move ten years ago now looks like the bank is chasing after something that is past.
Perhaps, one day, the financial centre of gravity really will have shifted to China, but for now it remains squarely aligned along the Tokyo-London-New York axis. Fundamentally, does HSBC want to be a global bank, or one whose only interests are in emerging markets?
Given the turmoil in these areas, the global path seems the best course.
Nick Hungerford, chief executive and founder of Nutmeg, says No.
It’s become clearer that London could easily weather an HSBC exit. The city stacks up several major advantages: language, perfect time zones, a strong legal system, a low tax regime, and the network effects that years of financial dominance have given it.
It’s true that finance and financial firms are mobile – but the ecosystem that supports finance in London has taken years to develop. That ecosystem is diverse and complicated, and it includes lawyers, technologists, graduates, appropriate buildings, and more.
In addition, finance is diverse: there are banks, but there are also investment managers, asset managers, venture capital firms, fintech pioneers, market makers, exchanges, and more. Banks gain from being in close proximity to those other financial partners, and they also gain from working in close proximity to the businesses they lend to and serve – and many of these are headquartered in London.
For these reasons, London will continue to thrive as a financial hub even without HSBC. And it’s for these same reasons we suspect HSBC will not, when it comes to it, actually leave.