Published November 05, 2012
LONDON – Europe's biggest bank HSBC will defer a decision on whether to move its headquarters from London until 2015 because of regulatory uncertainty, chairman Douglas Flint told British lawmakers on Monday.
HSBC was founded in Hong Kong in 1885 and moved its headquarters to London in 1992 after acquiring Midland Bank.
The bank normally reviews its domicile every three years but Flint indicated it would wait until the full details of Britain's plans to reform its banks are revealed.
"It's going to take until 2015 to get all the legislation in place and there's no way one makes this decision ahead of having the complete framework before us," Flint told the Parliamentary Commission on Banking Standards.
Former Barclays Chief Executive Martin Taylor last week told the commission that banks could leave Britain if they are asked to fully separate retail and commercial banking operations, as advocated by Paul Volker, the former Federal Reserve Chairman, who has also given evidence to the inquiry.
Britain is proposing that banks ring fence their retail operations from riskier investment banking activities but is stopping short of advocating a full separation.
The ring fence proposal was initially resisted by the industry but now appears to have been accepted.
"We have lost our right to self determination," Flint said, adding the proposals were a "perfectly legitimate model".
"We can work with this and the transparency will be good," he said.
That sentiment was shared by Barclays Chief Executive Antony Jenkins, who told the commission that the model would not affect banks' ability to lend.
"The ring fence can play an important part in enabling greater confidence in the system," Jenkins said.
Both executives urged regulators and lawmakers to provide clarity on their plans as soon as possible.
Britain launched a parliamentary inquiry into its banks in July, after Barclays acknowledged manipulating key interest rates, the latest in a long line of scandals which have rocked the industry.
The banking standards commission is expected to make legislative proposals by December 18.
(Reporting by Matt Scuffham; Editing by Steve Slater and David Cowell)