LONDON -- The British bank HSBC said Friday that it would review whether to move its headquarters from London as it faces a shifting regulatory landscape that includes a bank tax that has hit lenders based in Britain particularly hard.
The formal review comes as some shareholders and analysts have suggested that HSBC and Standard Chartered, which is also based in Britain, would be better off with their headquarters elsewhere, in part because they generate much of their revenue in Asia.
HSBC, which was founded as Hong Kong and Shanghai Banking Corp. in 1865 in Hong Kong, moved its headquarters to Britain in 1993 following its acquisition of Midland Bank. The lender has previously reviewed whether to shift its headquarters in the past, but opted to stay in Britain.
"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," Douglas Flint, the HSBC chairman, said at the bank's annual meeting in London on Friday.
"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."
British banks will be required by 2019 to shield their retail banking operations from the effects of investment banking and other activities in the event of another financial crisis.
The headquarters review also comes as political leaders in Britain have pointed to taxes on bank revenues as a way to finance government programs in the future. This year's general election is scheduled for May 7, making the bank taxes a political issue.
George Osborne, the chancellor of the Exchequer, has said that Britain's bank tax, calculated on bank balance sheets, is here to stay. The tax, known as a bank levy, was put in place in 2010 to help finance the government efforts to rescue the financial system, but it has also generated revenue for other programs.
The Labor Party, the primary opposition party in Britain, and the Liberal Democrats have both said they want to raise the bank tax to fund social programs in Britain.
The government has raised the bank tax nine times since it was introduced, taking in about $8 billion, according to the British Bankers Association.
HSBC's payment has more than doubled since 2012. The tax cost the bank about $1.1 billion in 2014, when HSBC reported a profit of $13.7 billion. It amounted to $472 million in 2012.
The tax applies to all banks that operate in Britain. It hits Britain-based banks particularly hard, however, as they are taxed on their global balance sheets. Overseas competitors such as Goldman Sachs are taxed only on their British operations.
It is not uncommon for banks on Wall Street and in Europe to suggest that they could move their headquarters to places where regulators and lawmakers are more accommodating. And the bank tax in Britain has led some to question whether banks based in Britain, like HSBC and Standard Chartered, both of which have huge global operations, should stay in London.
"The question is a complex one, and it is too soon to say how long this will take or what the conclusion will be," Flint said in the statement. "But the work is underway."
Responding to a shareholder's question, Flint did not provide any further reasoning for why the bank is reviewing the headquarters' location or indicate whether the bank is leaning in a particular direction.
"I've not threatened anything," he said.
Business on 04/25/2015