HSBC says no pressure to leave UK as bank tax decision looms

HSBC faces “no pressure” to move its headquarters out of Britain despite the prospect of higher bank taxes in Wednesday’s budget, chief financial officer Pam Kaur said, according to the Guardian. Her comments pushed back against speculation that the London-based lender could reconsider its location as the government weighs additional taxes on the sector.

Kaur specifically addressed the position of shareholders in Hong Kong, a cornerstone market for HSBC. The Guardian reported that she saw no pressure from those investors to shift the headquarters out of London, drawing a distinction between speculation about relocation and the demands being made by shareholders.

The comments came as HSBC reported a sharp increase in earnings. Its official third-quarter release showed pretax profit rose 32% to $9.6 billion in the July-to-September period compared with a year earlier, putting the bank’s financial performance alongside the debate over whether lenders should contribute more in tax.

The headline increase was partly driven by the absence of legal provisions recorded in the corresponding quarter last year. HSBC said the non-recurrence of those provisions accounted for a $1.4 billion favourable comparison, an important qualification when assessing how much of the profit increase reflected changes in the underlying business rather than earlier charges falling away.

Net interest income also increased, rising 6% to $9.3 billion, according to the earnings release. That measure captures interest earned less interest paid and is a significant component of banking revenue. The board approved a third interim dividend of $0.10 a share, adding a shareholder distribution decision to the quarterly results.

The headquarters question has emerged against warnings from banking lobbyists that higher tax bills could encourage large lenders to move business overseas. Kaur’s comments do not settle that wider argument: maintaining a headquarters in Britain and deciding where to place individual operations are separate questions. Her remarks nevertheless challenge the suggestion that a departure from London is being demanded of HSBC.

The immediate policy uncertainty concerns the budget rather than an announced tax change. The supplied Guardian report identifies John Healey’s forthcoming decision as the next development, with increases expected but not yet confirmed in that account. Until the measures are published, their scope and implications for individual banks remain uncertain.

Attention now turns to Wednesday’s announcement and the details of any changes affecting lenders. Those details will provide a firmer basis for assessing the industry’s warnings about competitiveness and overseas activity. For HSBC, Kaur’s stated position is that shareholder pressure to relocate is absent, even as the bank’s rising profits bring renewed attention to the sector’s tax contribution.