THE CHANCELLOR is under increasing pressure to take action to encourage HSBC to keep its global headquarters in the UK.
The beleaguered bank’s chief executive Stuart Gulliver set out plans for its review of potential headquarters, looking at criteria including the tax environment, the government’s attitude to finance and the stability of economy and regulatory system.
While it is thought George Osborne (pictured) will use milder language in his speech at Mansion House tonight (Wednesday 10 June), no major policy shift is expected.
HSBC has endured a miserable year, with scandal and controversy over its historic tax practices.
The furore centred on thousands of wealthy clients HSBC is said to have helped evade tax through its Swiss arm. As many as 100,000 customers were implicated, with between 6,000 and 7,000 UK-based.
Many British clients of the bank had failed to declare their holdings with HMRC, and while offshore accounts are not illegal, deliberately hiding money to evade tax is.
That evidence was used to find property millionaire Michael Shanly guilty of tax evasion, after he held his late mother’s money in an offshore account and chose not to disclose it to HMRC. Eventually, he pleaded guilty and was hit with an £800,000 bill. His is still the only successful prosecution to have followed the data.
The story first emerged when HSBC whistleblower Hervé Falciani stole data from the bank’s Geneva office and attempted to contact HMRC by e-mail in 2008.
It later emerged that the bank had separately created and advised on some of the UK’s largest film-based tax avoidance schemes, including the Eclipse investment vehicles.
Authorities in Hong Kong have indicated they would welcome HSBC back to its historic home, although the bank is also weighing up a move to Singapore.
In any case, HSBC’s brand is set to vanish from the UK’s high street as plans are enacted to set up a retail bank head office in Birmingham under a new name as part of a wider “reshaping” of the global business.
No new name has been selected as yet, but its online brand FirstDirect or a revival of the Midland name are both options.
Part of its plans include the shedding of 8,000 UK jobs as it seeks to reduce costs, which CEO Stuart Gulliver claims will be achieved voluntarily and through “natural attrition”.
“We recognise that the world has changed and we need to change with it. That is why we are outlining the following…strategic actions that will further transform our organisation,” Gulliver said in a statement.
“Asia [is] expected to show high growth and become the centre of global trade over the next decade. Our actions will allow us to capture expected future growth opportunities.”