HSBC, the biggest payer of the UK banking levy, will set out on Tuesday exactly how it plans to decide whether to keep its headquarters in Britain in remarks that will be closely watched by George Osborne as he prepares to deliver his Mansion House speech the following day to an audience of top bankers, reports The Guardian.
Despite a last-ditch lobbying push, the chancellor is expected to offer his City audience plenty of warm words on Wednesday while at the same time holding firm on the banking levy, which was a manifesto pledge.
Asked whether the chancellor was considering watering down his commitment to the levy, a Treasury spokesman said: “We are committed to maintaining our position as a global financial hub. And as set out at the budget, it is right that, as it becomes more profitable, our banking sector makes a fair contribution to fixing the public finances.”
HSBC will this week set out the methodology that will be used to determine whether to remain based the UK in a move that could reignite the debate about the wave of regulation that has imposed on the banking sector since the 2008 crisis.
The bank levy and rules requiring a ringfence to be erected between high street operations and investment banking businesses are expected to be the agenda set out by Stuart Gulliver, the boss of HSBC, at his strategy day on Tuesday.
He will be speaking just 24 hours before George Osborne is due to give his annual Mansion House address. The chancellor has faced intense calls from the finance industry to reconsider the scope of the levy which is imposed on the global balance sheets of banks, not just their UK operations.
Employers body the CBI is suggesting a review of the levy – raised nine times since 2010 to ensure it meets the chancellor’s revenue targets – may be warranted while the British Bankers’ Association is calling for a review of taxation on the sector.
Matthew Fell, CBI director for competitive markets, said: “Banks play an important role in financing the economy and repeated changes to the bank levy in recent times have been unhelpful. A review of its scope could help to ensure our financial services industry stays competitive and boosts investment.”
Gulliver said last month that the criteria the bank would use to decide whether to move out the headquarters out of the UK – where it moved in 1992 from Hong Kong – would be published alongside his latest strategy for the bank.
He is facing pressure from City investors to improve the returns of the bank, which has operations in more than 70 countries, by cutting costs and overhauling under-performing businesses. He is also battling to restore its reputation after a series of fines and an exposé by the Guardian and other publications about the tax avoidance strategies deployed for customers of its its Swiss arm in the past.
