HSBC Dismisses Talk of Leaving the UK as Bank Tax Rise Looms

A senior HSBC executive has moved to shut down speculation that the bank could relocate its headquarters out of the UK in response to expected tax increases in Wednesday's budget.

Pam Kaur, the bank's chief financial officer, told journalists on a media call on Tuesday that there was "no pressure" to leave London, including from shareholders in Hong Kong, a cornerstone market for the lender. "We are very comfortable, we are domiciled in the UK and we remain in the UK. So that question is just not on the table," she said. She added that, whatever happens on taxes, the bank is there to support its customers.

Her comments came as HSBC reported a 32% jump in third-quarter profits to $9.6bn (£7.2bn). The bank also announced plans to return $2.7bn to shareholders through dividends and share buybacks. The quarterly profit was helped by higher interest rates, lower loan losses and smaller legal provisions than a year earlier.

Lobby groups have warned for months that banks could move jobs and business to rival financial centres if faced with higher tax bills. The JP Morgan chief executive, Jamie Dimon, said he might even drop plans for a new £3bn London headquarters if Britain became "hostile" to banks. A small number of wealthy businesspeople have already said they are leaving the UK, with some criticising Labour's tax policies.

The Guardian reported earlier this month that the chancellor, John Healey, plans to tax the banks in the budget, and is likely to reverse cuts to the bank surcharge made by the previous Conservative government.

HSBC has history with such pressure. It earns most of its profits in east Asia and has a strong shareholder base there. In 2015, rising regulatory burdens and a new bank levy led it to consider moving its headquarters from London to Hong Kong, before the Conservative government scaled the levy back to cover only UK-based assets. In 2022, it faced calls to separate its Asian business from the rest of the group, amid anger that the UK had forced it to cancel its dividend during the first Covid lockdown.

Kaur offered broad support to Healey and the prime minister, Andy Burnham, saying the bank was "very encouraged by the government's growth agenda" and would "just have to see how businesses and customers react".

Despite the strong results, HSBC's UK-listed shares fell almost 6% on Tuesday morning, putting at risk its position as the biggest company on the FTSE 100. Kaur suggested investors may have hoped for stronger forecasts for net interest income, the gap between what banks charge on loans and pay on deposits. That figure rose to $9.3bn in the quarter from $8.8bn a year earlier, which HSBC attributed to hedging strategies and deposit growth in Hong Kong, while UK deposits were flat.

Campaigners for a bank tax seized on the figures. Paul Nowak, general secretary of the Trades Union Congress, said the results made it "blatantly obvious banks can afford to contribute more." Abhijay Sood, an economist at the New Economics Foundation thinktank, said the profits would be "difficult news to swallow for households struggling with rising mortgage costs", and argued that any bank tax change is unlikely to go far enough.