The bank’s plans are controversial to say the least, with some observers accusing the company of throwing a temper tantrum at Britain for its post-financial crisis banking regulations, while other observers fear for the future of the 50,000 people employed by the bank in the U.K.
But Toronto Mayor John Tory sees an opportunity for Canada’s largest city. Tory met with HSBC officials in London last week to sell them on the idea of relocating to Canada.
“Toronto is a … global financial services capital, and we just felt that when we saw news of them taking a look at moving their head office that we should be a part of that,” Tory told the Toronto Star, noting that HSBC may still decide to stay in London.
To be sure, Toronto wouldn’t be a totally unreasonable choice for HSBC. The city is already home to a number of multinational banks and insurers, and it recently leapfrogged Chicago and Boston to become one of the world’s top 10 financial centres, at least according to one measure.
And HSBC has been paying more attention to Canada recently than it usually does. It wants a piece of incoming Prime Minister Justin Trudeau’s stimulus spending, and is aiming to muscle in on the local banks and take 10 per cent of the market for infrastructure financing, the Globe and Mail reported.
The bank also said recently it sees Canada as a priority market.
Hong Kong has been considered the number-one contender for the headquarters of HSBC, which has a large share of its business in Asia and whose initials once stood for “Hongkong and Shanghai Banking Corporation.”
But a recent review carried out by the bank apparently identified the U.S. as the best choice for HSBC, noting that it "is one of the few countries with an economy big enough to be able to comfortably welcome a bank of its size.”
HSBC has US$2.67 trillion in assets, more than $60 billion in annual revenue, and more than 266,000 employees worldwide. It would be a major economic coup for Toronto and the whole country to land the headquarters of a business that big.
Last year, HSBC paid the U.K. C$1.5 billion under the country’s bank balance sheet levy, more than any other bank, and about a third of all the money collected through the tax.
The tax, which applies to a bank’s entire global balance sheet and not just its U.K. operations, was enacted after the British government was forced to spend some 500 billion British pounds (C$1 trillion) bailing out the country’s banks in 2008. HSBC was part of that bailout mechanism, but says it didn’t actually use government money.
The tax, which applies to a bank’s entire global balance sheet and not just U.K. operations, was introduced as a way of ensuring the banking sector contributes more to the U.K. economy, and also to discourage risky lending practices.
It amounts to 0.21 per cent of a bank’s balance sheet, but the British government this summer announced it’s cutting that tax in half, to 0.1 per cent, while adding a new 8-per-cent profit surcharge.
News reports out of Britain suggest that change may not be enough to convince HSBC to stay home, if indeed the bank decides to leave the U.K. at all.
The new bank levy, like the old one, will "reinforce fears that Britain is becoming a less attractive place for banks to do business," the head of the British Bankers’ Association, Anthony Browne, said this summer.
Original Article
Source: huffingtonpost.ca/
Author: Daniel Tencer
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