By Liam Vaughan – Sep 13, 2011
http://www.bloomberg.com/news/2011-09-13/u-k-banks-welcome-to-relocate-in-hong-kong-says-donald-tsang.html
Hong Kong would “absolutely” welcome London-based banks HSBC Holdings Plc (HSBA) and Standard Chartered Plc (STAN) if they decided to move headquarters to the former British territory, according to Chief Executive Donald Tsang.
“If HSBC or Standard Chartered were to change headquarters it would not undermine their business at all,” Tsang said in an interview yesterday. “They already have a healthy line of business in Asia.”
Tsang, who is in London to promote Hong Kong as a financial center to British business leaders, said that it was ultimately a decision for the banks and he didn’t “want to encourage a move that would impair relations” with trading partners including London and New York.
HSBC and Standard Chartered are among lenders required to comply with new British rules under plans published on Sept. 12 by the Independent Commission on Banking. China last month unveiled a package of measures to bolster Hong Kong’s role as a financial hub and to aid an economy that shrank in the second quarter for the first time since 2009.
Tsang was scheduled to meet Chancellor of the Exchequer George Osborne yesterday. He said the ICB’s proposals were reminiscent of the Glass-Steagall Act of 1933, which separated commercial and investment banking.
“Whatever the measures, you have to look at the viability and we are no longer in the 1930s,” he said. Banks’ decisions about where to set-up their headquarters “can be influenced by tax and regulation, but I do believe in the wisdom of the U.K. government in this regard.”
‘Very Keen’
HSBC has been told by Hong Kong regulators that it would be welcome if it decided to leave Britain, City AM newspaper reported on Sept. 7, without saying where it got the information.
Britain’s proposals on insulating consumer banking units, may do more harm than good, Lloyd’s of London Chairman Peter Levene said in an interview.
“There are other countries that are very keen on financial services,” said Levene, who’s a founder of NBNK Investments Plc (NBNK), which is trying to start a British consumer bank. Banks could consider going to other centers including Singapore, Shanghai, and Hong Kong, he said.
With a top tax rate of 50 percent, London-based bankers making more than 1 million pounds ($1.58 million) will pay about three times more in tax and social security than colleagues in Hong Kong, accounting firm KPMG estimated last year.
‘Lack of Taxes’
“If you ask businesses why they choose Hong Kong over other places, our surveys show that almost all of them place taxes at the top of the list – or perhaps I should say a lack of taxes,” Tsang said in a speech at the Think Asia Think Hong Kong conference in London.
Hong Kong has a separate government and economy, a legacy of the Chinese region’s status as a British territory until 1997, though mainland authorities have since exercised powers to reinterpret local statutes. At the handover of sovereignty, China promised to preserve Hong Kong’s capitalist system and free press for a further 50 years.
Tim Baxter, a spokesman for Standard Chartered in London, said the bank would keep its domicile under review, though it had “no immediate plans” to change. HSBC will review its headquarters, as it does every three years, once the government has responded to the ICB’s proposals, a spokesman said.
Both banks are linked to the British colonial era. HSBC traces its roots to the Hongkong and Shanghai Banking Corp., founded in 1865 to finance trade in opium, silk and tea. Standard Chartered’s history dates to 19th century banks which helped finance British colonial trade in Africa and India.
To contact the reporters on this story: Liam Vaughan in London at lvaughan6@bloomberg.net
To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net
