HSBC in new threat to leave the UK over Osborne banking levy

HSBC yesterday made a fresh threat to quit London, saying Chancellor George Osborne's banking levy and an EU-wide crackdown on bonuses meant it was no longer on "a level playing field" with its international rivals.

The threat was made in conference calls with journalists and City analysts, despite Britain's decision to slash corporation tax and Mr Osborne's repeated insistence that his "permanent levy" would bringing in no more than £2.5bn annually when fully up and running.

Michael Geoghegan, HSBC's chief executive, said the levy – imposed on the global balance sheets of UK headquartered banks – meant that a direct cost was being imposed for being based in London. He likened it to a "tax on emerging markets growth" where HSBC makes most of its money.

The bank also complained about Mr Osborne's creation of the independent commission on banking and European policy makers "going further than others" in the crackdown on pay. "Policymakers need to understand the consequences on the wider economy and growth," said Mr Geoghegan. "Along with many other international banks, HSBC already complies with the Financial Stability Board's global principles on remuneration. If the EU takes those principles further and applies additional requirements to European firms operating in emerging markets, it would place those firms at a disadvantage to their regional competitors and to those based in North America."

Stuart Gulliver, the multimillionaire investment banker who is preparing to succeed him as chief executive, said the bank faced: "Three very significant issues that we, our board and our investors need to be mindful of."

Douglas Flint, the finance director who becomes chairman next month, refused to make any promises on HSBC's location: the bank is set to revisit the issue next year. He said the current bout of sabre rattling by the company was driven by its investors. "This is what shareholders are saying to us. We are responding to an increasing number of inquiries about what is the cost in terms of dollars and business model (of a London base)."

While HSBC has not taken any direct state aid, it has benefited from the billions of pounds of taxpayers' cash that has been pumped into the banking system to keep it from collapse, and the cheap money supplied by the Bank of England.

But yesterday's hard words from its executives represent a ratcheting up of tension between the bank and the Government. Critics of the banking industry have said the levy is little more than a damp squib. Banks like HSBC have also benefited from the sharp cut in corporation tax pursued by the Government.

The bank worried some investors with its third quarter update saying there were signs of a "slowdown in the rate of recovery" in emerging markets and that there would be " bumps in the road". However, Mr Geoghegan added: "The global economy is in better shape than many expected a year ago, and I am pleased to report that HSBC's performance in October was in line with third quarter trends. But, while fears of a double-dip in the West may be overplayed, the passage from downturn to upturn is clearly taking longer than previous cycles."

The update did not include specific numbers but HSBC indicated that its "run rate" of profitability" in the third quarter was slower than in the first half. However, it still said third quarter profits were well ahead of what the bank achieved last year. Results in Europe – driven by the UK – have also been strong and "targeted marketing" has increased the company's share of the mortgage market share. The shares fell 12.1p to 683p.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
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

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
Srebrenica 20 years after the genocide: Why the survivors need closure

Bosnia's genocide, 20 years on

No-one is admitting where the bodies are buried - literally and metaphorically
How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

Power of the geek Gods

Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
What do strawberries and cream have to do with tennis?

Perfect match

What do strawberries and cream have to do with tennis?
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high