HSBC to Move 1,000 Jobs Outside London Before Bank Split RulesRichard Partington
HSBC Holdings Plc will move 1,000 jobs from London to Birmingham, England, as part of its plan to split consumer banking from riskier trading businesses.
The bank will set up new headquarters for its ring-fenced unit ahead of 2019 rules requiring lenders to erect firebreaks, according to a memo to staff on Tuesday obtained by Bloomberg News. A spokeswoman for HSBC confirmed the contents of the memo, which was sent by U.K. Chief Executive Officer Antonio Simoes.
The details of HSBC’s plan come just over a month before the country’s elections as British lawmakers seek to convince voters they can shepherd the nation’s economy and create jobs outside of London. The move would also reinforce the lender’s roots in the Midlands at a time when higher taxes could tempt it to relocate outside Britain.
“This is a big decision and the work involves a large number of people,” Simoes, 40, wrote in the memo. “Given that the customer base, employees and branch network of the ring-fenced bank cover all of the U.K., London isn’t necessarily the best place for the head office.”
HSBC was hit the hardest by Chancellor of the Exchequer George Osborne’s budget last week, with tax increases costing banks 5.3 billion pounds ($7.9 billion) over the next five years. The levy on banks’ global balance sheets could push HSBC and Standard Chartered Plc, which both have the majority of assets outside of Britain, to consider relocating their headquarters overseas, analysts said.
HSBC acquired Midland Bank Plc in 1992 in one of the world’s biggest bank transactions at the time. The lender moved its headquarters from Hong Kong to London as part of the deal. Midland Bank was started in Birmingham in 1836 by a former Bank of England clerk, Charles Geach, to help service the city’s business community, engineering firms, gunsmiths and jewelers.
HSBC would follow Deutsche Bank AG in moving jobs to the U.K.’s second most populous city, which will benefit from U.K. government plans to build a high-speed rail line to the city from London to shorten journey times and spur economic growth.
The lender is buying a 210,000 square foot building in Miller Group Ltd.’s Arena Central development in Birmingham and will take a 250 year lease. It will start moving staff in 2017 as it prepares to meet the Bank of England’s ring-fencing rules.
The bank has a U.K. workforce of about 48,000, with some 15,500 located in London and 2,500 in Birmingham.