News / Economy

HSBC keeps HQ in London

Monday, 15 February 2016 2:24 PM [ Last Update: Monday, 15 February 2016 2:22 PM ]

Banking group HSBC Holdings says it has decided to keep its headquarters in London.

Europe’s biggest bank HSBC announced on Monday that it has decided to keep its headquarters in London.

The bank through a unanimous vote by its board has also rejected the option of shifting its centre of gravity back to main profit-generating hub Hong Kong after a 10-month review.

This has now given a boost to London's status as a global financial centre.

Nevertheless, HSBC CEO Stuart Gulliver has warned that the bank could not stick with the status quo were Britain to vote in favour of leaving the European Union in a promised referendum.

Gulliver said around 1,000 employees will be moved from London to Paris if Britain votes to leave the EU.

The decision to stay in London comes after a tumultuous period for European banks, whose shares have tumbled on fears of a global economic slowdown and the impact on earnings from a prolonged period of low or negative interest rates.

HSBC shares are down more than 30 percent from last April when the group began its headquarters review, hit by China's flagging economic growth and market turmoil.

Meanwhile, reports say some investors had encouraged HSBC to consider moving its HQ from Britain, partly because of a tax on banks' global balance sheets brought in after the financial crisis which had cost it $1.1 billion in 2014.

But following extensive lobbying by the banking industry, British finance minister George Osborne said in July he would halve the levy and, crucially for HSBC, no longer apply it to the overseas assets of British banks, part of efforts to help to keep Britain an attractive place for banks.

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