Regulation and business development cited by HSBC as reasons for staying in London rather than moving to Hong Kong
Bank says it remains committed to Asia
HSBC’s Asia-Pacific chief says regulation and business development led the banking giant to decide against moving its headquarters back to Hong Kong, but it was still committed to the city.
Peter Wong Tung-shun, its Asia-Pacific chief executive, told the South China Morning Post on Monday the bank’s decision on Sunday not to transfer the headquarters to Hong Kong from London was not influenced by the Mong Kok riot last week.
“In fact, the UK has also had riots previously,” Wong said. “We studied whether we should move the headquarters to Hong Kong, starting 10 months ago when the UK implemented increasingly tougher regulations. However, after a 10-month study, we found that the regulatory requirements in the UK and Hong Kong were similar.”
He said HSBC’s business strategy of having its headquarters in Britain and its Asia headquarters in Hong Kong had the advantage of facilitating international flows and cross-border deals such as ChemChina’s acquisition of Swiss seed company Syngenta, where HSBC was the lead adviser.
“We are very familiar with both the Chinese companies and European regulation, which allows us to capture these cross-border transactions,” he said. “The decision won’t affect our commitment to Hong Kong, China and Asia, which in past years have contributed to our global business.”
The headquarters issue was now settled, Wong said, and it would only be revisited if new material circumstances came up.
The decision was seen as a boost for London and led some Hong Kong lawmakers to express concern about the city’s competitiveness. Democrat Sin Chung-kai, who formerly worked at HSBC, said the bank “has made the wrong choice as Hong Kong is its major profit contributor”.
Hong Kong Monetary Authority chief executive Norman Chan Tak-lam played down the impact of the decision.
“The decision of HSBC not to relocate its headquarters to Hong Kong does not lead to a negative image of the city as an international financial centre,” Chan told lawmakers on Monday. “Hong Kong is the premier banking and financial hub in Asia, with all but one of the 30 global systemically important banks operating here. Hong Kong remain HSBC’s largest source of profits and its Asia headquarters.”
Chan said the government would review its financial and regulatory system to enhance the city’s competitiveness.
HSBC group chief executive Stuart Gulliver said: “Having our headquarters in the UK and our significant business in Asia-Pacific delivers the best of both worlds to our stakeholders.”
The bank said in a statement that London had a deep talent pool, experience in handling complex international affairs, and a respected regulatory framework and legal system while Hong Kong was the bank’s “heartland” and played “a pivotal role” in its investment strategy for the Pearl River Delta region and Southeast Asia.
HSBC shares rose 4.47 per cent on Monday to close HK$50.25, outperforming the Hong Kong stock market’s benchmark Hang Seng Index, which rose 3.27 per cent .
Keith Pogson, senior partner at EY, said HSBC had wanted to leave London after the British government proposed new regulations that would have added to its costs but those plans had now been dropped.
“Overall Hong Kong remains a highly competitive business location as it is on the doorstep of large, high-growth markets in Asia including mainland China, India and Indonesia,” Pogson added.