LONDON Mayor Boris Johnson has urged HSBC to consider the long-term benefits of staying in London amid growing signs that the bank is eyeing a move to Hong Kong.
HSBC’s line has hardened recently, with chairman Douglas Flint criticising George Osborne’s balance sheet levy on banks as a “tax on being head-quartered here” and saying that shareholders have increasingly asked the bank to justify its London domicile.
The mayor’s office was quick to respond to HSBC’s shift in tone, with Boris vowing to do anything in his power to keep the banking giant in the City.
The mayor has sworn to “do what he can to prevent such a valuable source of income from heading to any other jurisdiction,” a spokesman for Boris told City A.M.
“We urge HSBC, however, to recognise that London has enormous long term advantages that others cannot match.” But he also warned: “London’s dominance as the global capital of finance cannot be taken for granted.”
Any intervention by Boris could stoke tensions between the Mayor’s office and the Treasury, with Johnson having repeatedly pushed for less banker-bashing rhetoric from the government and warning that the 50p tax rate is a “hostile signal” driving talent away from London.
HSBC is currently in the process of reviewing its domicile, which it does every three years. But this year’s review will go beyond the routine analysis due to a rapidly changing regulatory landscape, with some saying it is now likely to result in a decision to up sticks from the City.
The bank warned last week of the development of “differing, fragmented and overlapping implementation” of regulation globally.
It is understood that no final decision will be made on the bank’s domcilie until the Independent Banking Commission (IBC) reports in September. But if the IBC recommends a separation or subsidiarisation of retail and wholesale banking activities, shareholders will question whether it is worth staying in London.
The bank said it paid $4.85bn (£3bn) in taxes globally last year, with $383m going on UK corporation tax and $300m on the UK’s one-off bonus tax.