To most educated observers, HSBC is Hong Kong. The bank was intricately involved with the founding of the territory, right back to its opium trading roots in the 19th century. HSBC and the city sloughed off their associations with smuggling and piracy a very long time ago. But 'the bank', as residents call it, has never lost its dominance of finance and trade here. So HSBC's decision yesterday to move its chief executive, Michael Geoghegan, to Hong Kong seems nothing if not long overdue. Calvinist entrepreneur Thomas Sutherland founded Hongkong and Shanghae (sic) Banking Co (Limited) in March 1865, based, as he said at the time, on 'sound Scottish banking principles'. Sutherland immediately opened offices in Hong Kong and Shanghai to help finance British shipping and the booming trade moving Indian opium to the mainland. In 1874, it handled Hong Kong's first public loan and issued most of them thereafter for decades. The lender largely withdrew from the mainland after the communist revolution and handed over its headquarters to the government. But with opening and reform in the late 1970s, HSBC returned, becoming the first foreign bank to open a representative office in Beijing in 1980. When it became clear Hong Kong would return to Chinese ownership, HSBC, unlike some of the other colonial 'hongs', embraced the change, playing kingmaker to businessmen who would become our best-known tycoons. In the late 1970s, the bank recognised Chiu Chow entrepreneur Li Ka-shing as someone whose custom would replace that of the fading British corporate powers, and lavished support on him. In 1979, when Hutchison Whampoa collapsed into HSBC's arms after becoming overextended, the bank handed Li control of the conglomerate in an uncontested bid process, much to the chagrin of the colonial elite, who had thought Jardine Matheson or Swire should have got the prize. Li did not forget the favour. Squirrelled away in HSBC's Hong Kong executive quarters is a metre-high replica of HSBC's main building that Li gave the bank after the Hutchison deal. The statue is made of solid gold. The bank's sojourn away from its roots has been, from this historical perspective, incredibly brief. HSBC decamped its headquarters to London in 1993, a move widely seen as prompted by fear of creeping communist control of the city. The lender, which bought Britain's Midland Bank in 1992, is a giant in Europe. Geoghegan is the first chief executive to be based in Hong Kong since William Purves in the early 1990s. And while the official domicile will remain in England, HSBC's decision to move its leadership to Hong Kong shows it recognises the mainland as the key to its future. The bank has hired financial advisers to prepare a listing on the Shanghai Stock Exchange. It had been rumoured for many years that Communist Party officials wanted HSBC to deepen its links with China as a quid pro quo for greater access to the fast-growing and lucrative mainland retail banking market. But however far it extends its reach beyond the Lo Wu border, HSBC will remain a Hong Kong business. HSBC dominates the stock market, with its shares regularly accounting for more than 10 per cent of the Hang Seng Index. Many locals view their HSBC shares as their pension. When HSBC launched its US$17.7 billion rights issue in March following heavy write-downs at its US subprime lender, Household International, the city exhibited a palpable sense of anxiety and grief. The bank's shares fell 13 per cent the day after the fund-raising announcement, and retail investors were crying in the street. A newscaster, unable to contain her emotions, burst into tears on screen. HSBC, of course, has not moved its official headquarters back here. Its top brass spend much of their lives on airplanes, so Geoghegan's relocation may be just a symbolic move. But HSBC has pulled off a real coup - staying British-regulated while appeasing China and delighting the Hong Kong people. As corporate public relations goes, this is hard to beat.