HSBC reviews keeping London HQ as UK tightens banking regulations

Global banking giant, HSBC, says it has started a review to decide whether to keep its headquarters in Britain as the country is tightening regulation of the banking sector.

In a surprise announcement on Friday and less than two weeks before Britain's general elections, the bank again highlighted its concern about British government’s policy to ring fence British banks' retail operations to protect them from their investment divisions, AFP reported.

Subsequent to London’s measure, the board of directors has "asked management to commence work to look at where the best place is for HSBC to be headquartered" amid "regulatory and structural reforms," HSBC chairman, Douglas Flint, told shareholders at the bank’s annual general meeting in London on Friday, a company statement said.

"The question is a complex one and it is too soon to say how long this will take or what the conclusion will be; but the work is underway," Flint added.

HSBC, which was founded in Hong Kong and Shanghai in 1865, employs thousands of workers at its London headquarters.

"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, including the requirement to ring fence in the UK," Flint noted.

According to the HSBC official, "as part of the broader strategic review taking place,” the bank’s Board had asked management to start work on finding a better place for HSBC to be headquartered.

The decision comes after the HSBC was shaken by a scandal, which prompted the British government to consider imposing heavy financial penalties on banks, accountants, and companies that aid people evade tax.

The new measures would include penalties for facilitating tax evasion equal to the taxes and fines to be paid by the evaders themselves.

The scandal was revealed after secret documents showed that HSBC profited through its Swiss branch from doing business with arms dealers, who channeled mortar bombs to child soldiers in Africa, traffickers in blood diamonds, and other international outlaws.

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