The board of the biggest lender in Europe, HSBC (LON:HSBA), has unanimously decided to retain the headquarters of the company in London. The company’s intention to make a dramatic change to its politics and move the location of its headquarters from London to Hong Kong has in the end come to nothing.
Lured in by the booming trade and investment flows in Asia, last year HSBC decided to officially consider what it would take for the biggest European bank to move its headquarters away from the financial capital of the “old continent”.
A number of factors have surfaced since then: not only has Chinese data deteriorated materially with HSBC and other lenders in the region facing the Chinese slowdown, but the tight grip of power from Beijing continues to cast its shadow over the formerly liberal regime in Hong Kong.
While Chinese authorities are attempting to reign in the powers of an “independent” Hong Kong, Western entrepreneurs are becoming increasingly worried about an upcoming change of conditions in a business environment to which they have become accustomed.
Best of both worlds
HSBC has highlighted in an announcement: “Asia remains at the heart of the Group's strategy.” However, the “internationally respected regulatory framework and legal system” that London offers is unmatched.
Commenting on the decision, the Chairman of HSBC, Douglas Flint, said: “As we evaluated jurisdictions against the specified criteria, it became clear that the combination of our strategic focus on Asia and maintaining our Hub in one of the world's leading international financial centres, London, was not only compatible, but offered the best outcome for our customers and shareholders.”
Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders
Adding to the set of inconveniences is the growing demand for new employees in the region from a number of major banks that have announced the expansion of their businesses in Asia. As Finance Magnates has outlined in the past, the growing challenges in finding an adequate pool of talent in the Far East raises the barrier further.
“London is one of the world's leading international financial centers and home to a large pool of highly skilled, international talent. It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC,” the official announcement by HSBC on the matter highlighted.
The CEO of the company Stuart Gulliver added: "Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders. The completion of this review closes out one of the 10 strategic actions we set out at our Investor Update last June. My colleagues and I remain totally focused on completing the other nine actions."
