Jan 2011:
For all the talk, all the fear it would seem highly unlikely that a major British head quartered bank will be moving offshore any time soon. The London based press had had a field day drumming up fear in the high street, in homes, in businesses and even in government that thousands of banking jobs were going to be lost offshore.
However the anticipated bankers levy, bankers tax, increased banking regulation and general attitude of punishing the banks for their undistributed role in the financial crisis seems to have been watered down to say the least. Que surprise! That when push comes to shove a British government should lack the cojones to see it through.
Although in all fairness the cricket and strawberry mob who now run the UK I would not introduce policies to force one of the remaining profitable industries to up sticks to some offshore jurisdiction – moving their workforces into banking jobs offshore.
In response the banks have responded. For example Stuart Gulliver, HSBC’s CEO, has stopped any plans to move away from the City to somewhere like China. Needless to say this came only a few days after the news that the British bank reform acts would be far less reaching than some commentators feared.
Only just before Christmas he had warned that his bank could relocate offshore, probably to Hong Kong, should the administration make the British banks divide their investment and high street arms. He need not fear – there will not be a recruitment bonanza offshore as many staff refuse to follow the bank and thousands of offshore banking jobs become available.
Sir Vickers the boss of the Commission on Banking , the government established QUANGO investigating the banking industry stated only this week that potential restructuring of the UK's banks will not include a splitting up of biggest players.
It had been reported that Gulliver was of the opinion that London and its placement on Greenwich Mean Time meant the City remained the best and most efficient location to manage their global, worldwide enterprise. That fact that Douglas Flint, the banks chairman and himself are both settled in London has of course absolutely nothing to do with it!
Stuart Gulliver is famous as one of the City’s highest paid and best remunerated bankers. So rather than an offshore jurisdiction benefiting his personal, and the many thousands of London based bankers who work for him will continue to pay tax in the UK. This is in sharp contrast to his predecessor who moved the CEO’s banking job to China back in 2009, and faced a barrage of criticism.
The UK administration will most likely welcome Gulliver’s about face as a sign the banks are no longer thinking about moving offshore and take a sigh of relief. Not only does it show support for Britain and British Business nut valuable tax revenues and thousands of banking jobs have been preserved.
Coupled with this is the news that HSBC´s CEO will not contemplate moving his well paid banking job offshore. According to sources in the bank he will spend during each calendar months over sixty percent of his time in the UK, the rest spent in China and travelling around the banks offshore network. The report contradicts the news reported back in autumn of last year after his recruitment to the CEO job. At that stage it seemed that Gulliver would move offshore taking the job of group chief executive with him to Hong Kong.
This pattern is bound to be repeated as British banks remain in the City. Very simply the costs of moving offshore, especially in terms of staff turnover, potential loss of business and banking recruitment costs now outweigh the costs of remaining where they are. It is a mute point just how serious the banks were about relocating offshore – after all it one thing to set up a small branch and place a small team in offshore banking jobs, quite another to relocate the corporate HQ and entire entity offshore.
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