Hong Kong will welcome HSBC, Standard Chartered if they moved headquarters to city, minister says

HSBC and Standard Chartered Bank would be welcomed by the government, if they were to move their headquarters to Hong Kong, a senior minister said, adding that the city met international lenders’ regulatory and business requirements.

“HSBC has always had a lot of operations in Asia and Hong Kong, while a substantial portion of its profitability also comes from the region. Likewise, Standard Chartered Bank also has a big exposure to Hong Kong and Asia. The regulations and business opportunities in Hong Kong are very good. We would welcome it – if HSBC or Standard Chartered Bank decide to relocate here,” James Lau Yee-cheong, the city’s Secretary for Financial Services and the Treasury, said in a recent interview.

Lau’s comments come after the London-based lenders – also two of the city’s three currency-issuing banks along with the Bank of China (Hong Kong) – said on Wednesday they would cancel dividend payments in the fourth quarter and in the first three quarters of 2020, at the behest of the United Kingdom’s Prudential Regulation Authority, an arm of the Bank of England and their chief regulator. The cancellation is meant to allow them to reserve more funding for small and medium enterprises amid the Covid-19 pandemic.

This is the first time since 1946 that HSBC has cancelled its dividends. Last week, both banks suffered their biggest sell-off in a decade, while investors and brokers called for HSBC to move its headquarters back to Hong Kong to avoid the UK’s regulatory requirements.

“We took a considered decision on domicile in 2016, and so far do not have plans to change this. Hong Kong is one of our two home markets and continues to be a major contributor to the group. We have confidence in the resilience of Hong Kong as a financial centre, and we are committed to supporting its continued growth and development,” an HBSC spokeswoman said on Sunday.

The non-payment of dividends is the third time in the past two decades that Hong Kong has readied the red carpet for HSBC. There was speculation in 2008 that it would move back to the city for tax reasons; in 2015 for the spin-off of its UK retail business; and in 2016 because of the Brexit vote.