HSBC to keep HQ in London after government relaxes tax rules

Reworked banking levy will only tax HSBC’s domestic activity instead of its global balance sheet

HSBC, the bank at the centre of one of 2015’s largest financial scandals, is keeping its headquarters in London, despite its concern over the UK regulatory system.

In February last year the chairman of HSBC admitted the bank had wrought “terrible reputational damage” upon itself after it was revealed to be operating a systematic tax avoidance system through its Swiss subsidiary.

It then emerged the bank was keen to avoid paying any additional tax itself to the UK Treasury and began to hunt for a new location for its headquarters and was reportedly considering a move to China.

The bank had been paying £1bn a year through the banking levy, which it was unhappy about.

However, since then the government has changed the rules of the banking levy to HSBC’s evident satisfaction.

Instead of targeting banks’ overall global balance sheets, the tax was changed last year and now only applies to banks’ domestic operations.

As a result HSBC’s profits will hardly suffer as it derives most of its profit from overseas operations. Tidy.

Best of both worlds

Douglas Flint, the chairman of HSBC, told the BBC’s Today programme: “London offered the best of both worlds for us. HSBC at its heart is a bank focused on trade and investment flows.

“The UK is one of the most globally connected economies in the world with a fantastic regulatory system and legal system and immense experience in dealing with international affairs.

“The government’s made very clear its commitment to ensuring that that UK remains a leading international financial centre … We’ve ended up with the best of both worlds - a pivot to Asia led from London.”

Flint denied that HSBC had urged the government to change the banking levy.

He said: “We had no negotiation with the government. The government was well aware of our view, and indeed the view of many other people who commented upon it, but there certainly was no pressure put, or negotiation.”

It seems the government wished to accommodate the bank’s profit-making concerns without even being asked!

Now read

Social Bookmarks