HSBC says London already losing business to Europe because of Brexit fears

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The HSBC headquarters building is seen in the Canary Wharf financial district in London, Britain, as the lender reported more companies are asking their business be transacted through Europe instead of London due to fears of a “hard” Brexit when the UK leaves the EU. Photo: Reuters

Published: 2:55am, 13 Apr 2017

HSBC Holdings said some of its largest clients have already asked for their business to be routed through the bank’s offices in mainland Europe and aren’t waiting to see what Brexit deal the UK hammers out with the continent’s trading bloc.

“A small number of our larger clients are asking us to book more of their trade and foreign-exchange activity in their French operation through our Paris office than their UK” divisions, Noel Quinn, head of global commercial banking, said in an interview. Executives at multinational companies are “making plans to ensure they can continue to trade irrespective of the outcome. They can’t afford to wait for a decision that may not emerge until two years’ time.”

Global banks have started arranging for some British-based operations to move to new or expanded offices inside the EU after British Prime Minister Theresa May triggered discussions to leave the trading bloc.

Privately, many executives at the world’s biggest firms say they’re now assuming the result will be a “hard Brexit” -- the loss of their right to sell services freely around the region from the UK. That means they have to put contingency plans in place before the end of the two-year negotiation period.

The logo of HSBC bank in Paris, France, as more companies route their business through Europe due to fears over Brexit. Photo: Reuters

Quinn, who’s sat on the executive committee of HSBC, Europe’s largest bank, since December 2015, said some companies are also evaluating whether to “flip” their regional head offices to European cities from Britain. This would require them to reclassify the UK branch as a country office that would become a subsidiary of the continental headquarters, he said. This may result in some small-scale job moves and lost taxation for the UK government, as firms start reporting the purchase and distribution of services elsewhere.