UK HSBC to keep Headquarters in London

UK banking giant HSBC has announced it is to keep its headquarters in London.

Concerns about stricter UK regulations led Europe's biggest bank to launch a review into whether to move elsewhere, with Hong Kong seen as the most likely alternative.

But the bank said it had decided unanimously against the move and that London "offered the best outcome for our customers and shareholders".

The decision was seen as a vote of confidence for the UK.

'Ideally positioned'

In a statement, HSBC said that London had an "internationally respected regulatory framework and legal system" and added that it also was "home to a large pool of highly skilled, international talent".

It was therefore "ideally positioned to be the home base for a global financial institution such as HSBC".

Part of the review was considering whether the increased regulation of the banking industry in the UK - in particular the increased tax burden - warranted moving elsewhere.

But in the last Budget, the Chancellor George Osborne introduced a gradual reduction in the bank levy on balance sheets - a move which particularly affected HSBC, because of its large balance sheet.

In 2014 it paid £750m of the £1.9bn raised by the government through that particular tax.

The board added that it had also decided to end the practice of reviewing the location of the group's headquarters every three years, and would only revisit the matter if there was "a material change in circumstances".

'Vote of confidence'

The bank has had its headquarters in the UK since 1993 but makes most of its money overseas, and Asia accounts for the majority of its profit.

It stressed that Asia remained "at the heart of the group's strategy" and that it was putting "particular emphasis on investing further in the Pearl River Delta and ASEAN region".

Hong Kong's Monetary Authority (HKMA) said it respected HSBC's decision.

"The HKMA appreciates that for a large international bank such as HSBC, relocation of domicile is a very major and complicated undertaking," said Norman Chan, its chief executive.

"We respect the decision of the board of HSBC Holdings plc to maintain the status quo."

Share price fall

The Treasury welcomed the move.

"It's a vote of confidence in the government's economic plan, and a boost to our goal of making the UK a great place to do more business with China and the rest of Asia," a spokesperson said.

The business lobby group CBI also said the announcement was "good news" because strong banks were "critical for the British economy".

That sentiment was echoed by the BBA, the banking industry body and TheCityUK.

In line with other banks, HSBC shares have fallen sharply this year.

The stock is down 18% since the start of the year and more than 30% from last April, when the review into where to base its headquarters was first announced,

The company will report full-year results on Monday, 22 February. It is in the process of implementing a $5bn (£3.4bn) savings drive and cutting 8,000 jobs in the UK.