LONDON: Global banking giant HSBC on Friday said it had launched a review on whether to remain headquartered in Britain as the country tightens regulation of the sector.

In a surprise announcement less than two weeks before Britain’s general election, the Asia-focused bank again highlighted its concern about government policy to ring fence British banks’ retail operations to protect them from their investment divisions.

The board has “asked management to commence work to look at where the best place is for HSBC to be headquartered” amid “regulatory and structural reforms”, said HSBC chairman Douglas Flint in a statement.

“The question is a complex one and it is too soon to say how long this will take or what the conclusion will be; but the work is underway.”

HSBC, founded in Hong Kong and Shanghai in 1865, employs 48,000 across Britain with many of those based at its London headquarters.

“As I said at our informal meeting in Hong Kong on Monday, we are beginning to see the final shape of regulation and of structural reform, including the requirement to ring fence in the UK,” said Flint in an address to shareholders.

London’s financial sector, referred to as the City, has been embroiled in many scandals since the financial crisis, with HSBC currently at the heart of an alleged tax evasion scandal.

HSBC is facing a French criminal probe over its Swiss private banking arm after the so-called SwissLeaks allegations it had helped clients hide billions from the taxman.

Documents stolen from its Swiss unit allegedly indicate it helped over 120,000 clients to hide 180.6bn euros from tax authorities.

HSBC also expects to be fined over its role in the Libor interest-rate rigging scandal, which Thursday resulted in Deutsche Bank being fined $2.5bn by US and Britain regulators.

Published in Dawn, April 25th, 2015

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