Shareholders query London base for HSBC

HSBC shareholders are becoming increasingly restless over the bank’s domicile, with the UK bank levy a particular bugbear due to the proportion of its incomes earned abroad.

The bank has said that the levy will cost it $600m (£369m) this year, between the £315m and £390m forecasts for RBS and Barclays respectively, despite HSBC deriving a far greater proportion of its income from abroad.

By contrast, Standard Chartered, which makes nearly all of its money overseas, said it would put aside $180m (£110m) for the cost of the levy this year.

HSBC chief executive Stuart Gulliver said yesterday that the bank would prefer to stay in London and said that reports that it will imminently decide to move elsewhere were “speculative and presumptuous”.

But he added: “We are, however, in light of possible regulatory changes and additional costs such as the bank levy, being increasingly asked by shareholders and investors about the likely additional cost of being headquartered in the UK.”

The European Council published a report in January showing that the UK’s bank levy is the most stringent and wide-ranging in Europe, warning of “spill-over effects, distortion of competition and relocation of businesses” as a result.

HSBC’s annual report shows that it made just an eighth of its pre-tax profits in the UK last year (see above), and the numbers of staff it has based in Europe has been declining for several years.

Between 2008 and 2010, the bank’s European headcount fell 7.7 per cent to 75,700, whereas its Asia-Pacific staff numbers rose 2.1 per cent to 91,600.

The bank is also a relatively recent arrival in London, having moved its headquarters here in 1992.

It is currently conducting a review of the costs of staying in London, which it does every three years.

But this time, the bank’s chairman Douglas Flint has promised to publish a summary of the report’s findings in a clear demonstration that the bank is taking shareholders’ concerns seriously.