HSBC Seen Losing U.K. Corporate Clients If Bank Leaves London

HSBC Holdings Plc risks losing U.K. corporate clients if it decides to move its headquarters out of London, a survey of its British customers found.

More than 50 percent of customers who said they use HSBC as their primary bank would reconsider their relationship with the lender if it relocated to Hong Kong or another country outside the U.K., according to a survey by research firm East & Partners. Only 2 percent of 248 of HSBC’s top corporate customers said the move would help them, compared with 60 percent who said it would benefit HSBC itself, the firm said.

“The potential leakage of U.K. corporates from the bank in the event of a Hong Kong relocation should be extremely concerning to HSBC, and of course, equally encouraging to the bank’s competition,” said Paul Dowling, principal analyst at East & Partners Europe. “Customer reaction could produce the biggest seismic shift in market share seen since the onset of the financial crisis.”

HSBC’s Chief Executive Officer Stuart Gulliver, 56, who considers Hong Kong his permanent home, is weighing whether to move the bank’s headquarters due to rising tax and regulatory costs in Britain. HSBC is heaviest hit by a U.K. levy on lenders’ balance sheets, paying 750 million pounds ($1.1 billion) in 2014. The company expects to make a decision this year and a move to a jurisdiction such as Hong Kong could take as long as two years.

“We do not anticipate our review of the HSBC Holdings Plc location to have any impact on our clients,” the bank said in an e-mail. “Irrespective of the outcome of our review, the U.K. will remain one of our core markets in which we are dedicated to providing customers with continued good service.”

A quarter of HSBC’s core customers would “definitely” look at changing banks and a further 33 percent would “possibly” review their relationship, the survey showed. About 16 percent said they would “definitely not” change bank if HSBC moved, and 9 percent said they would be unlikely to.

A customer is defined as core if the chief financial officer or treasurer identified HSBC as the company’s primary bank, East & Partners said. The question was included in a survey of the U.K.’s top 1,000 companies measured by revenue conducted in the week ending June 11.