HSBC ends survey alliance with Markit

HSBC has ended a five-year tie-up with the financial information specialist Markit amid rumours of pressure from the Chinese Government.

Europe’s largest bank, which is currently considering whether to move its corporate headquarters from London to Hong Kong, revealed it had ended its sponsorship of the closely watched China purchasing managers’ index (PMI) and other emerging markets indices compiled by Markit.

The move had been widely anticipated, with some experts speculating that HSBC ended the deal because of pressure from Beijing. Other said the cost of the sponsorship had become too expensive.

“The sponsorship arrangement is now coming to an end and we will announce replacement sponsors soon,” Markit said. Multiple banking sources told Reuters that Markit had been seeking other sponsors around Asia to replace HSBC, but many believed the price tag was too high, especially given the political sensitivity of being associated with an indicator that often contradicts official data.

Last month, HSBC said it will decide whether to remove its headquarters from London by the end of this year. The main choice is between its current headquarters in Canary Wharf and a return to its historic roots in Hong Kong. Singapore is seen as very much a third and less attractive option. Some have expressed scepticism about the likelihood of a move given that HSBC could be more subject to pressure from Beijing if it relocated to Hong Kong.

HSBC revealed the 11 criteria that the board – led by chairman Douglas Flint – is using to decide on which country should host its HQ. Key among these are economic importance and future growth, the regulatory regime, the ability to attract and retain top talent, stability and the tax system.

The UK bank levy is seen as a key factor because it is charged on the bank’s entire balance sheet, not just its UK assets.

Hong Kong not only has no such levy but also charges a lower rate of corporation tax. However, a move back to Hong Kong would mean ultimately that the bank would end up being regulated by China.

The chief executive Stuart Gulliver also revealed that the ring-fenced UK retail bank, formerly known as Midland bank, would be broader than originally planned and have a new brand name.

“We believe that the world’s economy will continue to shift to the East,” Mr Gulliver said in May. “No decision has been taken yet and the debate has not yet started within the board. It is more than a tactical response to anything which has happened in the UK. Tax must be transparent, fair and competitive.”