The banking giant's chairman has said it is contemplating moving its headquarters out of the UK and is now reviewing its options.

Hong Kong/London-listed HSBC, which is marking its 150th anniversary and has been through a traumatic period due to controversy over its Swiss private bank, gave the strongest possible hint today that it might shift its headquarters out of the UK.

In comments for the bank’s annual meeting, chairman Douglas Flint, referring to issues such as changing regulations on banks and the risks that the UK might leave the European Union, said the bank’s board is asking management to examine the “best place” for HSBC to have as its headquarters in the future. Its HQ is currently in London.

“It is also essential that we position HSBC in the best way to support the markets and customer bases critical to our future success. In this regard, we also have to take fully into account the repositioning of our industry being driven by the regulatory and structural reforms which have been put in place post-crisis,” Flint said in a statement.

“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.

“As part of the broader strategic review taking place, the board has therefore now asked management to commence work to look at where the best place is for HSBC to be headquartered in this new environment. 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,” Flint said.

Although HSBC did not ask for or receive bailouts from the UK taxpayer in the financial crisis, the arrival of new “ring-fencing” regulations designed to protect retail bank clients from woes in the riskier investment banking side, and recent hikes to bank levies, have raised questions over whether a global bank such as HSBC will retain its UK headquarters. In light of its Asian connections, history, and sheer growth of that region, such a shift out of the UK has been talked about in the industry for some time. Such a move will be politically controversial, however, and seen as a blow to UK policymakers.

Flint also referred in his speech to the possibility that the UK could vote to exit the European Union in a referendum. “One economic uncertainty stands out, that of continuing UK membership of the EU. In February, we published a major research study which concluded that working to complete the Single Market in services and reforming the EU to make it more competitive were far less risky than going it alone, given the importance of EU markets to British trade,” he said.

Storm over Geneva
A recent media and political storm in the UK – and some other nations – surrounding the Swiss private bank of HSBC, headquartered in Geneva, may also have soured HSBC’s views about remaining in the UK. Data stolen from the bank as far back as 2006-07 has been used by the Washington DC-based International Consortium of Investigative Journalists to allege that thousands of account-holders dodged taxes. Senior HSBC figures, including Flint, and CEO Stuart Gulliver, were grilled by a UK parliamentary body in recent weeks about the matter. It is understood that a large number of accounts affected by the data theft had been closed over a decade ago; HSBC has said that since 2008, it has sharply reduced the number of accounts in its Swiss bank.

Flint reiterated the bank’s contrition for past problems at the private bank.

"We all take these issues very personally; the board, my colleagues on the leadership team and the 266,000 colleagues who work for HSBC today when the bank is found wanting. And just like the societies we serve, the vast majority of people who work for HSBC get up every morning to do the right thing for the communities of which they are an integral part, and they are incensed at the damage done to the brand by a very small number of individuals who broke our rules and circumvented our controls,” he said.

“HSBC has paid a heavy price. Our reputation has been damaged and the financial burden of the unacceptable behaviour has been borne by you, our shareholders in fines, penalties, additional costs and the opportunity costs arising from diversion of management time – this is clearly wrong,” he said, adding: “As new regulation which will clarify individual responsibility is embedded and fresh legislation comes into force that will widen the sanctions available to address the most egregious behaviour, I hope we will see much greater individual accountability visited on those directly responsible.”