Hong Kong Welcomes HSBC, StanChart to Relocate Home
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HSBC and Standard Chartered were named by Hong Kong authorities as lenders which are welcome to relocate headquarters to the city where they derive the majority of profits.
Last week, HSBC insisted that London would remain its home in the foreseeable future but reiterated its commitment to Hong Kong over the weekend, calling it one of its two home markets.
HSBC has always had a lot of operations in Asia and Hong Kong, while a substantial portion of its profitability also comes from the region, said a report, citing the local secretary for financial services and the treasury James Lau Yee-cheong
Likewise, Standard Chartered Bank also has significant exposure to Hong Kong and Asia. The regulations and business opportunities in Hong Kong are very good. We would welcome it – if HSBC or Standard Chartered Bank decided to relocate here.
The issue of headquarter relocation reemerged after British lenders recently decided to scrap dividends due to orders by the Bank of England, including those with deep ties to Asia like HSBC and Standard Chartered.
Whilst the move made sense from a U.K. perspective, the Asia-centric nature of the two banks may pose issues such as a competitive disadvantage, at least in terms of near-term profitability, due to more costly regulatory pressures thus far. In addition to sourcing four-fifths of its profits from Asia, one-third of HSBC’s shareholders are retail investors from Hong Kong, its former home and birthplace 155 years ago.
The Hong Kong Monetary Authority followed up last week with the reassurance of healthy local balance sheets and the lacking need to cancel dividends.
Aside from a more favorable regulatory environment for banks, Lau also highlighted ample opportunities for international lenders coupled with a business-friendly government.
Hong Kong’s financial markets will continue to benefit from the development of Greater Bay Area projects, which will bring in a lot of opportunities to international lenders, Lau added.
The current outbreak might lead to some slowdown, but it is not a financial crisis. The Hong Kong government has brought in many relief measures – and we will offer more – to help companies cope with the economic impact of the pandemic.
Questions & Answers
Q.Why did the idea of HSBC and Standard Chartered relocating their headquarters resurface recently?
Why did the idea of HSBC and Standard Chartered relocating their headquarters resurface recently?
The issue re-emerged after British lenders scrapped dividends due to Bank of England orders. This included HSBC and Standard Chartered, despite their strong ties and profitability in Asia, potentially causing a competitive disadvantage.
Q.What proportion of HSBC's profits come from Asia and who are a significant portion of its shareholders?
What proportion of HSBC's profits come from Asia and who are a significant portion of its shareholders?
Four-fifths of HSBC's profits originate from Asia. Also, one-third of HSBC's shareholders are retail investors based in Hong Kong, which was the bank's original birthplace.
Q.How did Hong Kong's financial regulators respond to the recent dividend cancellations by British lenders?
How did Hong Kong's financial regulators respond to the recent dividend cancellations by British lenders?
The Hong Kong Monetary Authority reassured that local balance sheets were healthy and there was no need to cancel dividends. This contrasted with the Bank of England's orders to British lenders.
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