Global banking giant HSBC has decided to keep its headquarters in London, England, after flirting with the idea of a move to Hong Kong.
The company conducted a 10-month review amid concerns that tougher regulations and higher taxes in the UK would financially damage its business.
The company’s board of directors unanimously voted to stay in the British capital, calling the city, “an important and globally connected economy.”
“It has an internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs … [and is] home to a large pool of highly skilled, international talent,” HSBC said.
Moving to Hong Kong would have been a homecoming of sorts for HSBC — the bank was founded in the city while it was a British colony. In 1992, the bank relocated its headquarters to the UK after buying Midland Bank.
The move wasn’t just about British banking regulations. Asia has grown in importance for HSBC in recent years, accounting for 80% of the bank’s profit. HSBC reported $12 billion in profits in Asia in 2014, compared with a loss of $257 million in Europe.
Along with positioning itself in a major profit hub, Hong Kong was offering lower corporate taxes to go along with its less strict banking regulations.
HSBC’s review found that “the combination of our strategic focus on Asia and maintaining our hub in one of the world’s leading international financial centers, London, was not only compatible, but offered the best outcome for our customers and shareholders,” said Douglas Flint, the group’s chairman.
“For a large international bank such as HSBC, relocation of domicile is a very major and complicated undertaking,” said Hong Kong Monetary Authority chief executive Norman Chan.
HSBC said it will also now stop reviewing the location of its corporate headquarters every three years, and only do so as required by changes in its business.