HSBC’s Relocation Threat is Comical and it isn’t Going to Happen
News that HSBC is considering whether or not it wants to remain headquartered in London has sent predictable shockwaves through the UK media, no doubt to the great satisfaction of those in the big corner offices in Canary Wharf.
There is an election coming up after all, and our banking chums probably don't think it hurts to concentrate politicians' minds a little. But this is ultimately comedy and in comedy, timing is everything.
Big banks like to point out that they don’t have to be domiciled anywhere in particular. That they are mighty global titans who can choose to put their brass plates more or less where they like and we are lucky to have them, what with all the wealth they create, jobs they provide and, taxes that they pay.
Maybe they can move and perhaps we are lucky to have them. But when you stop to think about it, the pool of likely destinations is really rather small for these financial behemoths. Angola? South Sudan? Russia? Argentina? I don’t think so. Where big finance tends to like to live is in large, developed, open economies with a strong rule of law, decent infrastructure and a deep pool of capital.
leaving London for Paris because you don't like business regulation is about as smart as coming the other way because you love creme brûlée
The list is narrowing before our very eyes.
Then there are the perks, the non-essentials but nice-to-haves for the individuals that work in these institutions. Take a turn around St. James’s one spring morning and you’ll see plenty that might be attractive. The private members’ clubs steeped in patrician history. The restaurants twinkling with Michelin stars. The agreeable boutiques. The chance to join the pageant of global celebrity nightlife.
When you think of it further, there’s not actually a lot of Tatler magazine-posing with Elle Macpherson that can be done in Frankfurt. (Obviously, Paris ticks a lot of these boxes too, but leaving London for Paris because you don't like business regulation is about as smart as coming the other way because you love creme brûlée.)
Then there are the schools. Are we really going to take Lysander and Jocasta out of Eton and Roedean, darling? It’s a commonplace idea that these joints serve Russian oligarchs and Saudi royals in transit, but you can bet most of their trade is in fact funded by bank bonuses.
During a visit to a cycle shop the other day, jealously contemplating a beautiful £7,500 carbon-framed road bike with electric gears, I asked the sales assistant how many had sold.
“Seven,” came the reply.
“Who buys them?” I asked.
“Bankers,” he snarled.
Banks will probably get what they want. And they’ll probably stay put
We haven’t even got to the yachting possibilities of the South coast yet; the boxes at Wimbledon; the plump game birds just waiting to be shot or all those lords that bankers like to hang out with. We really are short of alternatives now, aren’t we?
No, what HSBC has done, and it may be something we should thank it for, is to remind the UK what it does for a living, or for a large part of its living. The bike shop salesman may have evinced a very of-the-moment dislike of the big swinging dicks, but who else was going to buy what he was selling?
Another very small pool.
Bankers aren’t idiots. At least some of them aren’t.
They knew there had to be some political backlash from the crisis they caused. Frankly, they probably thought there’d be more (and here’s another possible reason they’ll be staying — faced with a choice between a British low-security prison or a Chinese one, I know which one I’d go for.)
HSBC and others just want to remind Westminster that punitive taxes and levies are not something they or their shareholders will tolerate ad infinitum, whatever the allure of Mayfair, and also that they’d very much like the UK to remain within the European Union. This is a nudge to politicians on the left and the right, a veiled threat to Cameron and Miliband not to get to carried away with their electioneering.
Banks will probably get what they want on both counts. And they’ll probably stay put.
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