HSBC appears set to move its headquarters out of the UK in bid to avoid the burdensome tax obligations.The bank levy introduced by George Osborne in 2010 has hit HSBC particularly hard. The annual levy applies to large UK banking groups and overseas banking groups whose global aggregate liabilities exceed £20 billion. Europe’s largest bank by assets has said that it is considering a move to the US. HSBC sees the US regulatory system as more favourable. Also, the US financial system’s ability to accommodate a business of its size has made the US a more strategic choice. HSBC handles well over 2.6 trillion US dollars worth of assets. HSBC had earlier considered Hong Kong as a preferred destination due to its links and history to the country but political concerns and possible vulnerability to Chinese control has prompted a reconsideration.
HSBC plans to move out of the UK could be damaging to the economy. Not only will it damage the UK’s status as a global financial hub, it might trigger other banks to follow suit.