HSBC is thinking about moving its headquarters to Canada’s financial centre, Toronto, as it continues to consider leaving the UK.
Chairman Douglas Flint, along with other HSBC executives, held talks with senior city officials, including Toronto’s mayor John Tory, about a possible relocation in October, according to a report in the Times.
HSBC is currently in the middle of a massive review of whether it should move its headquarters away from London as changes to corporate tax and increased regulation in the UK threaten to stifle HSBC’s profitability.
Toronto becomes the latest addition to a list of potential new locations for HSBC’s headquarters.
New York was touted as a possible location in October, although it is thought that a move back to the bank’s original home, Hong Kong, is the most likely outcome if the bank does end up relocating.
However Toronto is pushing its case to be HSBC’s new home, and a series of discussions have been held.
John Tory, the city’s mayor,
told the Toronto Star newspaper: “Toronto is a global financial services capital, and we just felt that when we saw news of them [HSBC] taking a look at moving their head office that we should be a part of that.” He added: “If you don’t participate, then you don’t learn and if you don’t participate, then you certainly can’t win. So, we’ve put our best foot forward . . . The rest is in the hands of the gods as they would say.”
Canada has a higher basic corporate tax rate than the UK, but does not impose a profit surcharge, something proposed by the UK’s government. Canada also got better overall scores in 11 criteria used by HSBC to assess the viability of new HQ locations, Reuters reported earlier this year.
The country is already home to HSBC’s largest operation in North America, along with a subsidiary, HSBC Canada, which is headquartered in Vancouver. At the minute all five of Canada’s biggest banks have their operational headquarters in Toronto, although no major international banks are currently based in the city.
While HSBC moving its headquarters is being taken seriously by most people, there is a school of thought that the potential relocation is merely a tool to get the British government to back down on new banking regulations.
So far threats from HSBC to leave the UK have proved pretty effective. The government has already changed the wording of the so-called senior managers regime, which was designed to make senior bankers prove they did everything they could to prevent misconduct within their organisations. The wording of the rule was changed from the “presumption” of guilt for executives to a “duty of responsibility.”
HSBC has consistently refused to comment on any move, saying that it will only talk about the potential relocation once it has made a final decision. That decision was originally expected late this year, but it is now widely believed that it will be announced alongside the bank’s full year results at the end of February 2016.