HSBC postpones review on UK relocation
HSBC will indefinitely postpone a review on the relocation of its headquarters because of regulatory uncertainties, chief executive Stuart Gulliver said yesterday at an informal shareholders' meeting in Hong Kong.
'Until the regulatory environment has settled down, and the constant changes that are being required by the regulatory environment are finally set ... we can't carefully consider this,' said Gulliver.
The bank usually reviews its headquarters location choices on a three-year basis.
At one point, the bank had became quite vocal about its option of moving from London because of anticipated regulatory changes that would have weighed heavily on its operation.
At this point, Gulliver said, the advantages of being headquartered in Britain still outweighed the disadvantages of not moving.
The bank's retail business in Britain was still a 'brilliant operation', but HSBC would keep an open mind on exiting if regulations and downturns in Europe hurt business, Gulliver said.
He also said the European debt crisis was entering a crucial phase.
To hold the euro zone together, he said, multilateral organisations such as the International Monetary Fund and the European Central Bank would need to take strong action and support the system with about Euro1 trillion (HK$10 trillion).
'We are entering a rather worrisome stage, where the Greece situation is fragile ... and if the Greeks do decide to exit, the second thing is how do you protect Spain.'
Deterioration in the euro zone would also have a disruptive effect on Asia as hedge funds and other financial institutions would have to liquidate their profitable assets in Asia to support losses in Europe. Asian exports were also likely to drop, he said.
With most of its businesses in Europe focused on Britain, the exposure of HSBC - Europe's largest bank - to Greece remains small with only 15 branches and 600 staff.
The bank is about two-thirds of the way through its restructuring plan, which aims to cut about 30,000 people. Since the first quarter of 2011, it has cut headcount by 16,000.
Gulliver stressed that HSBC was still hiring, but in other sectors. About 3,500 of the lay-offs occurred in the first quarter of this year. About 3,000 were announced in Britain just recently, but there were some hirings as well, putting the net cuts at 2,200.
The 16,000 people it has let go so far exclude those who are no longer with the bank after it sold the operations where they worked. Some 13,000 people, for example, went off its headcount as HSBC disposed of its credit card business in the US and upstate New York branches.
In Hong Kong, while it announced several rounds of lay-offs, its headcount remained and would stay at around 29,000 this year, said Peter Wong Tung-shun, HSBC Asia chief executive.
Group chairman Douglas Flint said the bank would try to raise its dividend payout ratio. Last year it stood at 42.4 per cent, the lower end of a 40 to 60 per cent payout plan.
The number of people HSBC has let go as part of a headcount reduction