HSBC has not been far from the headlines in the past few days, and we can expect more news from the global banking giant today as it publishes its Annual Results.
The issue that has kept so many City figures interested in the company for the past few months has been its decision over where it would base its headquarters. With London selected unanimously by its board, the “will they, won’t they” saga that had been rumbling on for ten months is over.
As I said last week, the decision is good news for the City and not just in terms of UK jobs – HSBC employs just under 50,000 people at the moment, although the vast majority of these would have been unaffected by a move of headquarters. It is also a strong vindication of our status as the leading global financial centre, and in its very own press release the bank highlighted that one of the UK’s strengths is that it is “home to a large pool of highly skilled, international talent.”
When the chancellor announced reforms to the bank levy in the Budget last year, many commentators cited this as an attempt to appease the bank. But the reality is that a host of major multinational firms keep their HQ location constantly under review. The idea that they simply plant their flag and say that London is their home neglects the global push and pull factors which will help them inform their decision. These reviews are not simple and they take time. But banks have a responsibility to their shareholders and, when the latter speak up on this issue, the banks have to listen.
London has to fight hard to maintain its position. New York offers an attractive option with its huge domestic market. Singapore, with its envious position as the World Bank’s number one destination in which to do business, has a similar appeal. But it was Hong Kong, largely because of HSBC’s huge Asian market operations, and its historical connection to the territory, that was the only next logical option.
It is not just London that has benefited from HSBC’s decision but also the wider UK. There are 510,630 banking jobs in the UK, accounting for 1.7 per cent of the country’s total employment. But we need to delve a little deeper to really tell the story. JP Morgan is the biggest private sector employer in Dorset. Two thousand people work for Citibank in Belfast. And last year HSBC announced 1,000 retail banking jobs were to move to Birmingham. The banking sector, as we see, is not just rooted in the Square Mile and Canary Wharf and therefore HSBC’s decision to keep its HQ here is not just a ringing endorsement for London, but actually for the whole of the UK.
The City of London enjoys a close working relationship with HSBC alongside other key financial firms. We admire its innovative attitude in developing new products and services in emerging areas such as green finance and RMB-denominated assets, which strengthen the UK’s position as the leading international financial centre. As key emerging economies continue to grow, the UK stands to gain much from closer ties with the Asian market and HSBC will be playing a big role in achieving this.