HSBC To Shun Reprisal Of Regular HQ Reviews

HSBC is unlikely to reinstate formal periodic reviews of its headquarters even if it decides to remain based in the UK following a ten-month inquiry.

Sky News understands that directors of Europe's biggest bank do not want to commit to the triennial examinations that took place before the financial crisis, partly because of the resources, cost and management time involved in each exercise.

People close to HSBC say that it will instead keep the issue "constantly monitored", with the outcome of the current review expected to be announced after a board meeting in London on Sunday.

Reports in recent days have suggested that the bank's board will rubber-stamp a decision to remain headquartered in the UK, with the verdict partly swayed by recent economic growth data and political controversy in China.

It (Other OTC: ITGL - news) remains possible that an announcement could be delayed by several days, but HSBC directors want to resolve the issue ahead of the bank's annual results on 22 February.

HSBC kicked off its relocation review last April, when it said the emerging shape of regulatory reform meant it was appropriate to "look at where the best place is for HSBC to be headquartered in this new environment".

Growing investor disquiet over the bank's tax bill was among the factors behind the review.

The requirement for major lenders to establish ring-fenced subsidiaries by 2019 has also caused consternation on HSBC's board.

Since then, however, George Osborne has moved to reduce the tax burden on HSBC by restructuring the Treasury's Bank Levy.

Condoleezza Rice and Henry Kissinger, who both held the role of US Secretary of State, were two of the figures consulted by the bank - even though the US itself was never seriously considered as an alternative headquarters.

Directors did examine Canada, France and Hong Kong, with some board members still likely to advocate the last of those jurisdictions at Sunday afternoon's board meeting.

The review has been complex, and has thrown up issues for HSBC including the potential loss of its membership of London's blue-chip share index if it moved its headquarters back to Hong Kong after a 23-year absence.

In a presentation to investors last June, Stuart Gulliver, HSBC's chief executive, said that criteria such as taxation and the ability to attract talent were among the factors that would shape the bank's decision-making.

The bank has also cited a British exit from the European Union as a risk factor, although it has not figured in the domicile review given that the board's decision is being made prior to a UK referendum on the EU.