On banking, the Conservative manifesto had it right: “Hardworking taxpayers supported the banks during the financial crisis and so the banks should in turn support them during the recovery.” Bankers got rich playing pass-the-parcel with debt, before it transpired that their game was pass-the-parcel-bomb. Some of the banks were bought up outright by the public, but all relied on implicit guarantees and the liquidity that the state washed through the system. The wider consequences of their folly hardly need spelling out: suffice to say that with UK GDP per head still just below its pre-crisis peak, we’re talking seven lost years for Britain.
Contrition, therefore, remains the appropriate mood for the industry as a whole. That is triply true for HSBC, whose reputation has been tainted thrice over since the crisis: first there was the laundering of Mexican drug money, next came massive compensation for PPI mis-selling, and then, most recently, revelations about the Swiss subsidiary’s industrial-scale efforts to cheat the public coffers, by facilitating tax avoidance and even evasion by wealthy clients. In these circumstances, the chancellor and the governor of the Bank of England will today nonetheless keep up with venerable tradition, donning evening dress to join the money men at the Mansion House, with George Osborne set to impress the assembled with a dubious plan to legislate for permanent surpluses. What is truly breathtaking, however, is that HSBC should have used the eve of this event not to approach the chancellor as a humble supplicant but effectively to threaten him.
In many respects, the HSBC strategy review unveiled yesterday was an admission of failure. The swaggering vision of “the world’s local bank” is in retreat, with operations in Brazil and Turkey due to be respectively pared back and sold. Jobs are to be cut back across the planet, including those of 8,000 workers in Britain, arguably victims of the bank’s sluggishness in grappling with the digital revolution. And the 16 years of advertising fees that have been spent on trying to turn HSBC into a trusted high street name – to replace the old Midland after the global giant gobbled it up – turn out to have been wasted. For the bank has now concluded that the post-crisis split between retail and investment banking operations will require it to, once again, rebadge its branches.
Together with recent financial results that are below par, all of this ought to provide reasons aplenty for a humble mood. Humility, however, was in short supply when the chief executive, Stuart Gulliver – who was in the past given to organising his personal finances through a Panamanian company with a Swiss account – set out the strategy. Instead, and not for the first time, the bank is stirring up chat about whether it could soon sling its hook from these shores, and move its headquarters to Hong Kong. Floating the disposal of those re-re-branded Midland branches would, on its own, have been enough to set the rumour mill whirring. But in case the message weren’t clear enough, HSBC also launched an explicit “Structured review of Location of Holding Company”.
No matter that Hong Kong falls under the ultimate sovereignty of a People’s Republic of China where property rights surely remain more at the mercy of politics than in the west. No matter, either, that only 32 of the 50 years promised for Hong Kong’s capitalist way of life at the 1997 handover to Beijing remain. No matter even that, within the last year, protests about election rules on Hong Kong’s streets have reinforced doubts about its democracy. Together with the bank’s (long-established) Asian centre of gravity, its disgruntlement at the terms of the UK bank levy is nonetheless – or so it claims – enough for it to consider shouldering all this political risk.
Whatever else the chancellor may have to say at the Mansion House, he must stand his ground on the levy. HSBC may well be bluffing, but even if not, the number of British jobs that would go with a shift in the HQ would be a fraction of those that the bank has just announced it will axe. A review of the levy’s detailed operation might just about be squared with the text of the Tory manifesto pledge to “keep the bank levy in place”, but it would hardly fit with the spirit. And after HSBC’s extraordinary performance yesterday, it would amount to craven surrender.
Source:https://www.theguardian.com
