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
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower