HSBC adds UK to name as ring-fencing looms


Sky News has learnt that HSBC announced the decision to thousands of UK-based staff on Thursday morning, with an external announcement set to be made later.

The new name will be visible across the bank’s 1000 UK branches, and will be introduced at the beginning of 2018, a year before laws requiring lenders to segregate their retail operations come into effect.

The decision, announced by HSBC’s group chief executive Stuart Gulliver at a town hall event in Birmingham – where its ‘ring-fenced bank’ will be headquartered – may dampen suggestions that it will seek to sell the UK business as a consequence of industry reforms being introduced by the Government.

In a memo sent to HSBC’s 250,000 employees around the world and seen by Sky News, the bank said that research involving staff and customers had led to the conclusion that it should retain the HSBC name.

“It soon became obvious that everyone preferred a name that maintains a strong connection to HSBC, and a clear commitment to the UK,” the memo said.

“That’s why we have decided to call the ring-fenced bank HSBC UK, with ‘UK’ distinguishing it from our non-ring-fenced banking operations.

“Our customers told us the HSBC brand represents strength and connectivity; they said our global network can help them realise both their domestic and international ambitions and that’s what differentiates us from other UK banks.”

Mr Gulliver added in the memo: “Our ambition is to be the bank of choice in the UK and as a name, HSBC UK will build on the global connectivity and customer trust of the HSBC brand and differentiate us in a competitive market.”

Sky News revealed several days ago that HSBC executives had decided not to reintroduce the Midland name despite Douglas Flint, the bank’s chairman, having been quoted in June as saying that it was “the odds-on favourite”.

“The Midland isn’t a name that younger banking consumers recognise,” a senior source said last week.

The news comes just days after HSBC became the latest UK bank to be affected by a processing error which temporarily affected payments to customers.

The decision to retain the HSBC name in the UK will be closely scrutinised by the City for clues about the likely outcome of the group’s review of whether to move its headquarters for the first time since it arrived in London in 1992.

HSBC announced in April that it would undertake the assessment in the context of tax and regulatory changes, with Hong Kong and the US posited as potential alternatives.

Mr Gulliver said in June that restrictions on the ability of group directors to exert influence over key decisions at ring-fenced subsidiaries had discomfited HSBC executives because it would leave them effectively performing the role of asset managers.

However, a person close to the bank said the decision about the branding of its ring-fenced operation should not lead investors to draw conclusions about the outcome of the domicile review.

The non-ring-fenced bank owned by HSBC, which will comprise other UK-based activities such as its wholesale and global banking and markets business, will continue to be branded under the existing HSBC name.

The decision to keep the HSBC name on its UK retail bank also indicates that executives perceive there to have been little damage to the brand from the Swiss tax evasion scandal which re-emerged earlier this year.

George Osborne announced in his Budget in July that the Bank Levy, which has hit HSBC punitively since it was introduced four years ago, would be restructured.

While HSBC’s bill from the Bank Levy will reduce over time, the impact on its overall tax burden remains unclear because of a new Corporation Tax surcharge that the Chancellor has also decided to implement on banks which make profits of more than £25m.

HSBC declined to comment on the internal announcement.