In a surprise move the Hong Kong and Shanghai Banking Corporation (HSBC) has said that the case for it to move its domicility to Hong Kong for tax reasons is 'overwhelming'.
HSBC is Europe's largest bank and reported a doubling of pre-tax profits last month of £11.8 billion for 2010 and bad debt losses fell from £16.1 billion to £8.7 billion. It is also the sixth largest banking and financial services group in the world and, according to Forbes magazine, the eighth largest company.
First opened in Hong Kong, HSBC moved to Britain in 1991 when it took over Midland Bank and reportedly looks at its domiciliary position once every 3 years and usually rubber stamps a decision to remain in the UK.
But this time regulatory uncertainty as well as the possibility of increased taxes has, according to the Telegraph, made some of the bank's largest investors ready to support a move out of the UK.
HSBC has said that reports that it is moving out of Britain are 'premature' but the mere threat of this has got city bosses in a spin and turning on 'old man' Mervyn King.
According to the Metro "HSBC's chairman Douglas Flint and chief executive Stuart Gulliver said: 'Talk of imminent change in HSBC's position on this matter is entirely speculative and presumptuous.
'London continues to be widely recognised as one of the world's leading international financial centres, a position it has built over many decades through deliberate policy action.
'We are however, in light of possible regulatory changes and additional costs such as the bank levy, being increasingly asked by shareholders and investors about the additional cost of being headquartered in the UK.
'We are very clear that the City of London’s competitive position deserves protection.'
The HSBC rumours have also got Boris Johnson the Mayor of London out begging for the bank to remain UK based with a spokesman for the Mayor saying "London's dominance as the global capital of finance cannot be taken for granted. We need to provide a consistently competitive environment to attract and maintain the best. We urge HSBC, however, to recognise that London has enormous long-term advantages that others cannot match."
These big banks have got us over a barrel haven't they?