HSBC has confirmed that it's actively reviewing a plan to quit its headquarters in London.
And there's one big reason that the bank may move, which it didn't mention in its filings: It wouldn't have to pay the
The levy is a tax on bank balance sheets - if you're headquartered in the UK, it doesn't just apply to your UK operations, but your whole global enterprise. Of course, HSBC wouldn't pull out of London entirely. There'd still be individual employees and the business would pay other taxes, but it could avoid this one.
Here's a snippet from HBC's latest annual report:
HSBC
The Bank Levy rose from making up about 8% of HSBC's taxes in 2013 to more like 12.5% in 2014. The total bill has doubled in three years.
And what's more, Chancellor George Osborne hiked the Bank Levy at his last budget and the only way for that figure to climb seems to be upwards. It's gone from a charge of 0.156% to 0.21% - that's after eight other increases since 2011. Initially, it was set at just 0.05%. It's a popular tax, unsurprisingly.
Under previous governments, big investment banks might have kicked up a fuss about the levy, but with public opinion pretty much decided on this issue, they haven't been lobbying against it in public.
Here's a snippet from the HSBC's latest results:
During 2014, the UK government also confirmed the permanence of the UK bank levy. This was introduced in 2010, in part to address the burden borne by taxpayers from failures during the global financial crisis; in 2014, the cost to HSBC of the levy was US$1.1bn, an increase of US$0.2bn over 2013. 58% of the levy we pay does not relate to our UK banking activity.
They're quite clear here: More than half of the bank levy it's paying doesn't relate to anything it's doing in the UK. And the bank is very specific in that it regards the levy as a cost of being HQ-ed in London:
The expense of the UK bank levy is included in the Europe geographical region as HSBC regards the levy as a cost of being headquartered in the UK.
Here's HSBC's employment breakdown. It's not clear how many of the UK proportion work at the HQ, or how much of that work might be moved abroad if the change goes ahead:
HSBC
There's also a jab at another Conservative policy which HSBC does mention in Friday's announcement - the potential for a referendum on the UK's EU membership:
One economic uncertainty stands out, that of continuing UK membership of the EU. In February we published a major research study which concluded that working to complete the Single Market in services and reforming the EU to make it more competitive were far less risky than going it alone, given the importance of EU markets to British trade.