Banking reforms may force HSBC to quit UK

Chief executive objects to commission's proposal to raise extra debt capital

HSBC yesterday made its most explicit threat yet that it is prepared to quit the UK if the Government adopts the Independent Commission on Banking's (ICB) proposed reforms in full.

Stuart Gulliver, HSBC's chief executive, said the bank's board would not decide on where to base its headquarters at the end of this month as planned and was prepared to wait until 2013 to weigh up legislation based on the ICB's report.

The big issue for HSBC is not the ICB's key recommendation to ring-fence retail and investment banking. Instead, the bank objects to a measure requiring it to raise extra debt capital as a buffer against losses.

Mr Gulliver said the proposal would punish HSBC's prudent balance sheet, which is more than fully funded by customer deposits. Raising $55bn (£35bn) in the market and parking the money in low-yielding government bonds would cost the bank more than $2bn a year, he said.

Asked if the bank would have no alternative to quitting the UK if the costs stayed the same, Mr Gulliver said: "We don't know whether the Government will implement the recommendations in the ICB report as currently configured, so we don't have enough facts to make the decision. We are also saying that the board is acutely aware of its fiduciary duty to its shareholders. We are trying to make those two [facts] quite separate but also somewhat linked."

Mr Gulliver also took a swipe at Bill Winters, the ex-JP Morgan banker who sat on the ICB. "You need to talk to Bill Winters and so on. It's very helpful if you're JP Morgan or you have JP Morgan's balance sheet or you have an asset-deposit ratio over 100, which in the UK is everyone but us and Standard Chartered."

HSBC and Standard Chartered are furious that the ICB's proposals penalise them for having more deposits than loans – which they say makes them more liquid and safe than other UK banks.

Barclays and Royal Bank of Scotland have accepted the ICB's reforms but Mr Gulliver has put the Government on notice that he wants a rethink on loss-absorbing debt.

HSBC moved to the UK less than 20 years ago from its historic base of Hong Kong when it bought Midland Bank. Some of its shareholders have urged it to return to escape UK regulation.

Mr Gulliver made his comments as he unveiled reduced quarterly profits and admitted he was now aiming for the low end of his financial targets.

HSBC's underlying pre-tax profits for the third quarter fell by a third to $3bn as the eurozone crisis hit investment banking revenues and bad debts from the disastrous Household acquisition in the US came back to haunt it.

Lloyd's hit with ratings alert as boss takes break

The beleaguered Lloyds Banking Group suffered a fresh blow yesterday when the ratings agency Moody's said it was considering cutting its rating on the company's debt as a result of the leave of absence taken by chief executive, Antonio Horta-Osorio.

An exhausted Mr Horta-Osorio was said by the bank to have taken the break "on medical advice" and is slated to return in a month or two. But Moody's said it feared that this could put at risk vital restructuring work as Lloyds battles to integrate HBOS, the rival bank it rescued at the cost of a multibillion-pound Government bailout. Such a move by Moody's would hike Lloyds' borrowing costs at a time when it is battling to raise wholesale funding.

James Moore

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power