- Board convenes in London Sunday to debate whether to exit city
- Europe's biggest bank to release full-year results Feb. 22
HSBC Holdings Plc’s board will meet on Sunday to decide whether to shift its headquarters from London, according to two people with knowledge of the decision.
The board has a meeting scheduled in London and if a decision is reached, the bank will make a formal announcement that evening, said the people, who asked not to be identified because the process is private. There is a chance the board will not reach a verdict and postpone the decision, the people said.
The board, led by Chief Executive Officer Stuart Gulliver and Chairman Douglas Flint, started a review of the bank’s U.K. domicile in April, mulling tax systems, financial regulations and the ability to tap qualified staff among 11 factors outlined. British Chancellor of the Exchequer George Osborne has since made concessions to the largest banks, scrapping plans to raise the tax burden further and helping pave the way to ease regulatory scrutiny.
“An announcement will be made when the board makes its final decision and, if necessary, a further update will be provided at the time of the full year results announcement,” Morgan Bone, a spokesman at HSBC, said in an e-mailed statement.
HSBC rose 1.4 percent to 438.65 pence at 11:12 a.m. in London, paring its loss this year to 18 percent.
The board has another meeting scheduled for Feb. 19 in London, where members will sign off on the bank’s full-year results, according to the people.
Finance Director Iain Mackay has said HSBC considered Hong Kong as well as Canada, the U.S., China, Australia, Singapore, France and Germany as possible locations. Hong Kong is seen by analysts and shareholders as the most likely destination. Large investors including Aberdeen Asset Management Plc forecast the bank to stay in London.
“It’s too difficult logistically, and whether Hong Kong would be the right place for them to go would be a different story,” Martin Gilbert, CEO of top-10 shareholder Aberdeen, said in an interview on Bloomberg Television Tuesday. “The government in the U.K. have conceded enough to keep them.”
Osborne’s proposal last year to dilute a levy on bank balance sheets was interpreted by analysts and investors at the time as a concession to keep Asia-focused lenders HSBC and Standard Chartered Plc from moving abroad. Osborne also ousted the regulator’s chief enforcer, Martin Wheatley, and u-turned on a plan to assume senior bank managers are guilty until proven innocent, which lenders blamed for hindering the recruitment of top foreign executives.
HSBC will also have to consider the long-term impact if the U.K. votes to leave the European Union. “Brexit” would damage the country’s financial industry because investment would be lost and rival cities would try to poach business from London, two of the nation’s most senior corporate directors, Barclays Plc Chairman John McFarlane and BT Group Plc Chairman Michael Rake, said last month.
Prime Minister David Cameron, who faces euro-skeptic sentiment in his party as well as the country, has pledged to hold a vote on Britain’s membership of the 28-nation bloc. EU leaders meet in Brussels to discuss the U.K.’s pitch for fresh membership terms on Feb. 18-19, paving the way for a referendum as early as June 23.