Bank tax rise stokes pressure for StanChart, HSBC to quit UK

Fri Mar 20, 2015 12:45pm EDT
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By Steve Slater and Sinead Cruise

LONDON (Reuters) - Asia-focused banks Standard Chartered (STAN.L: Quote) and HSBC (HSBA.L: Quote) could be tempted to abandon their London headquarters to avoid a jump in the UK bank tax set to cost them a combined $2 billion a year, investors and analysts said.

Investors in both banks, but particularly Standard Chartered, have in the past encouraged their boards to consider leaving Britain, and this week's jump in the UK bank levy is building pressure.

"I think it is a live issue for both names and that's the first time I've ever been of that opinion," said one HSBC shareholder, who also owns some Standard Chartered stock.

"It’s always been talked about but there is a confluence of events for these stocks that now make it a realistic prospect."

Britain this week said it will increase its annual bank levy by more than a quarter to 3.7 billion pounds ($5.5 billion) a year. About 70 percent comes from the big UK banks, and more than one-third could come from the two Asia-focused banks.

One of Standard Chartered's 10 largest investors told Reuters it would make sense for the bank to look again at the issue.

Standard Chartered faces paying about $500 million under the tax this year, or about 9 percent of expected profits. The tax cost it $366 million last year, up from $235 million in 2013.

HSBC could pay $1.5 billion under the levy this year, or about 7 percent of expected profits. It paid $1.1 billion last year, up from $904 million in 2013, and said 58 percent related to activity outside Britain.   Continued...

HSBC and Standard Chartered Bank headquarters are seen at Hong Kong's financial Central district in this October 14, 2008 file photo.  REUTERS/Bobby Yip