HSBC should leave Britain – it would be better for both parties – MoneyWeek

Firstly,itisnt,andneverhasbeen,aparticularlyBritishbank。

AstheHongKongandShanghaibitofitsnamesuggests,HSBCisacolonialinstitution。

ItonlymoveditsdomicilefromHongKongtoLondonaspartofthedealtobuyMidlandBankbackin1992。

IthasonlybeenaBritish-basedbankfor18ofthe145yearsithasbeeninexistence。

In1992itmadesensetomovehere。

HongKongwasabouttobereturnedfromBritishtoChineseCommunistrule。

Inthosedays,peoplestillthoughttheremightbesomethingslightlyleft-wingabouttheChineseCommunistParty–asuspicionthathaslongsincebeenbanished。

Backthen,Britainwasabusiness-friendlycountrywithsomeofthelowestpersonalandcorporatetaxratesinthedevelopedworld。

LondonlookedlikeasaferplacetobethanHongKong?

Thatisnttrueanymore。

FlintiscertainlyrighttothinkaboutshiftingthebanktoAsia。

Thatiswherethebulkofitsbusinessnowgetsdone,andwhereitsprofitsarerisingfastest。

Lastyearitmade$11。

6bninAsiacomparedwith$4。

3bninEurope。

Thatgapisonlygoingtogrowwiderandwideroverthenextfewyears。

Europe,andBritaininparticular,isgoingtobeaminorpartofitsbusiness。

Atthesametime,Londonisnolongersuchagreatplacetodobusiness。

MostofHSBCshighlypaidstaffwillnowbetaxedat50%iftheyarebasedinthiscountry。

Itwillhavetopaythebankinglevythegovernmenthasimposed。

CapitalrequirementsarehigherinEuropethantheyareinmostofAsia。

TheupcomingreviewofthestructureoffinancialservicesfortheBritishgovernmentmaywellrecommendthatretailandinvestmentbankingbesplitapart。

ThatsahugethreattoHSBC,whichisabigplayerinbothbusinesses。

Simplybyswitchingitsheadquarterssomewhereelse,HSBCcouldavoidallthathassle。

Itwouldbecrazynottothinkaboutit。

Foritspart,Britainshouldbequitehappytoseeitgo。

True,HSBCpaysasignificantamountofcorporationtax。

Thebankpaid£1。

2bnintaxlastyear。

Ofcourse,thereisacertainprestigetohavingHSBCasaBritishcompany。

Itisoneofthe20largestcorporationsintheworld,measuredbymarketvalue。

Itisthethird-biggestbankintheworld。

Britaindoesnthavesuchaglutofglobalgiantsthatitcanaffordtolosemany?

Butitisimportantnottoexaggerate。

Foreigncompanies,whichiswhatHSBCwouldbecome,stillpaycorporationtax。

Itisestimatedthatitwouldpay£500mlessifitmovedabroad。

Thatishardlyavastsum。

Ofcourse,Londonwouldstillbeitsmainregionalhub。

AllthebankersatCanaryWharfheadquarterswouldbepayingtaxat50%。

ItsbusinessinBritainwouldbeasimportanttoitasever。

However,wewouldnolongerberesponsibleforitsfate。

AsthegovernoroftheBankofEngland,MervynKing,hasputit,banksareinternationalinlife,butnationalindeath。

HSBCisavastoperation。

Ithasmorethan100millioncustomers,almosttwicethepopulationofBritain。

Lastyear,ithadabalancesheetof$2。

45trn。

ThatismorethantheentireGDPofBritainitself?

WhathappensifitrunsintotroublethewaythatRoyalBankofScotlanddid?

Inreality,abankthesizeofHSBCcouldliterallybankruptthecountry。

Ofcourse,nooneissuggestingthatwillhappen。

HSBCissoundlymanaged。

Thenagain,noonewassayingRoyalBankofScotlandwouldcollapse–andyetithadtobesavedbytheBritishtaxpayer。

Anamicableseparationwouldbebestforbothsides。

HSBCwouldbefreedfromtheBritishtaxandregulatorysystem,andBritainwouldbefreedfromhavingtorescuethebankifitranintotrouble。

SurelythatsabettersolutionthanconstantlyarguingaboutwhetherHSBCstaysorgoes?

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