- A British exit, known as a Brexit.
- UK bank tax that is set to cost  HSBC a combined $2 billion a year.
- Advantages over relocating it in Luxembourg
The HSBC Group (HSBC) is one of the world’s largest banking and financial services organizations, with an international network of about 6,200 offices in around 74 countries and territories.
Due to increased British regulation and taxation of the banking sector and other costs associated with being based in London even in April, shareholders urged HSBC to consider moving its headquarters to Asia.
On June 16, HSBC announced that it is in talks to move its headquarters to Luxembourg from London. Of course lately in April HSBC announced that it had told the UK Treasury that it was considering moving its headquarters to Luxembourg from London, and it weighed the possibility of a British exit.
London bears the attraction of being the European epicenter of finance, home to more foreign banks than any other city on the planet and some believe that Chief Executive Stuart Gulliver may be making a grave mistake in leaving London. Even so the bank has been hurt by severe costs and reputational damage, the future remains optimistic the bank should adapt its core strategy. Of course bank is doing that because on June 2, they said that plan to cut thousands of jobs across its global operations to improve the profitability of its sprawling operations and try to squeeze out up to $5 billion in annual cost cuts by 2017.
So cutting the cost HSBC will shift its focus to growth markets, but the high focus will be on Asia as it considers it as “untapped market," because since its foundation in 1865 its goal was to finance trade between Asia and the West.
HSBC has been present in Luxembourg since 1977Â with several hundred staff comprising 30 nationalities and more than 25 languages, which offer a wide range of banking and financial services including Private Banking, Corporate Banking, securities services and asset management.
It also acts as a UCITS management company for the Luxembourg domiciled investment funds of HSBC Global Asset Management. Distribution and asset management for these funds is delegated to HSBC Global Asset Management entities around the world that have specialist expertise.
Since more 300 companies deal from Luxembourg we can consider the following notable advantages for Luxembourg :
- HSBC Private Bank (Luxembourg) S.A. provides private banking and asset management services to wealthy individuals and their families.
- Even so London is home to many foreign banks, but Luxembourg is also the largest fund center in Europe and the largest international hub for fund distribution, offering strong investor protection and low country risk.
- With more than 1.3 million researchers and scientists, it is considered a big source of knowledge and innovation.
- Luxembourg is a platform to the European Union and beyond because, as an international hub in the EU, it offers flexible business.
- With more than 500 million consumers is a very large strategic market.
In the end the bank is also considering the tougher rules imposed by the European Union for conducting business outside of the eurozone, what is clear these changes are not likely to lead to a large number of jobs moving to Luxembourg and of course many other companies may follow HSBC because in March Reuters gave a report that Asia-focused banks Standard Chartered could be tempted to abandon its London headquarters just to avoid a jump in the UK bank tax.
