As the regulations surrounding High Street banks continue to grow, many are now seeking to comply with the “ring fencing” rule by establishing separate headquarters for their personal and business divisions and their investment arms.
However, today HSBC chief executive Stuart Gulliver has claimed these regulations show that the UK has “rejected the concept of universal banking”, adding that HSBC bosses will decide whether to remain in the UK or move overseas by the end of the year – despite having acquired a new Birmingham base for its personal and business banking divisions.
The banking giant acquired 2 Arena Central earlier this year, with the 250 year lease representing the West Midland city’s largest property deal since 2002, and last week Birmingham City Council gave the green light for the build to go ahead.
In total, the property will comprise of more than 190,000 sq ft of Grade A office space which will be occupied by HSBC from its completion in early 2018 – well ahead of the ring fencing deadline of January 1, 2019.
HSBC UK chief executive officer Antonio Simoes believes that establishing the chain’s personal and business banking divisions in Birmingham will prove profitable both for customers and for the bank overall.
He says; “We want to be the bank of choice in the UK – creating our ring-fenced bank head office in Birmingham gets us a step closer to that ambition for our 16 million personal and business customers.
“We have a strong track record of establishing banks outside of London, with first direct in Leeds and M&S Bank in Chester both recognised for great customer service.
“Birmingham City Council has worked hard and significantly invested to make the city an attractive home for UK businesses and their employees.”
Unfortunately, however, the comments made by Mr Gulliver today have caused a degree of uncertainty about how long HSBC will continue to operate in the UK, with many analysts believing the bank is now looking to Asia for a new main base of operations.
Indeed, Mr Gulliver claims that shareholders have expressed a belief that the bank would be better served by moving its headquarters from Canary Wharf to Hong Kong, where the city’s central bank would be “perfectly able to regulate HSBC.”
The news comes on the same day that HSBC revealed an impressive boost in pre-tax profits during the three months to the 31st of March, with the 4 per cent rise to £4.66 billion resoundingly beating predictions made by analysts.
However, Mr Gulliver has admitted that the banking scandal within the group’s Swiss division has “had an impact on the sense of pride people have working for HSBC”, indicating that this stellar performance is overshadowing a slightly more negative undercurrent within the business as a whole.
With shareholders increasingly arguing against the bank levy and calling for HSBC to reconsider its UK operations, these results may prove to be the cushion against a period of uncertainty over its future in the UK.