Jun 4, 2019

Case for HSBC to move HQ to Hong Kong looks compelling

Several executives, past and present, have said they still expect the bank to move back to the place where the The Hong Kong and Shanghai Bank was founded in 1865. Relocating to Hong Kong is not without its risks, especially at a time of trade tensions between China and the US. Many residents in the autonomous region fear that the Communist Party will eventually impose its command-and-control model, which would pose unique challenges for HSBC. But the rationale for redomiciling is stronger today than it was in 2015, when HSBC kicked off a review of whether London was the right place for its headquarters. In the Hong Kong Monetary Authority, HSBC would have a principal regulator that already knows the bank well. HSBC only moved its headquarters from Hong Kong to London in 1993 to smooth the way for its takeover of Midland Bank, part of a global dealmaking spree in the 1990s and early 2000s designed to lessen the bank's reliance on Hong Kong. Although the threat of quitting London resulted in a reduction of the size of the bank levy HSBC must pay to the UK Treasury, the public contest also irritated officials in Hong Kong and Beijing who felt spurned when the group stuck with London.

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