Hsbc 'under Pressure' To Exit London

[billybong]

Thank for your confidence in me, but the chances are another job will not pay as well. I'll probably move to where there's more work.

I'm thinking there's a lot of people like me too, and if it happens the UK will be a lot poorer. Unless we can sell off the Civil Service or something. What would we get for that?

I understand your concerns and it's a shame that HSBC has decided to throw its weight about and risk the jobs of those dependent on it. Perhaps they will desist and realise "we are all in this together". Dare I say some hope.

"My word is my bond" used to be the saying in "the City" and perhaps HSBC will accordingly honour its promise to leave.

Edited November 7, 2010 by billybong

[lulu]

The entire premise of the UK economy during the Blair/Brown years was that we were somehow especially gifted with financial talent and that gave us a comparative advantage in the international economy.

It was bullsh*t because 95% of all the finance industry is bullsh*t. Better swallow the bitter pill, take our 10 years or so of abject pain and find a new way. Enabling the financial junkie will end in death.

Very true and shame on Brown and Blair for presiding over a Labour government who chased this as a desirable situation.

It was on the news earlier that in parts of some cities of the UK 30% of familes have no working adults. Brown and Blair were blinded by the bling of the Square Mile and forgot about the rest of the UK for whom they did nothing (or very little). Now once again the Tories are getting the blame for a serious miscalulation from a Labour Government, instead of providing opportunities and jobs for the masses they focused on a far too narrow sector of our economy and we are left now picking up the pieces.

[South Lorne]

You wake up! You've been indoctrinated by banking blackmailers, you would find another job.

...beefeater..?....their uniforms are smart....and the tourists will take photographs of you....

[tomwatkins]

What is 'cost' of running an international finance business? If an international bank in London sydicates a European bond sale and makes 0.2% on the deal, then what does that 'cost' us?

I'm much rather all the legal and accountancy fees etc stay in London rather that going to Switzerland. Quite a few are leaving already. One of the big hedge funds, Bluecrest moved to Switzerland 6 months ago. They do exactly the same business as before, but now the Swiss get the tax receipts and their businesses benefit at they money is now spent there.

What is there to spend your money on? Feckin Toblerone (sp?) Switzerland is sh!te.

[no accountant]

What is there to spend your money on? Feckin Toblerone (sp?)

It's better than Dairy Milk.

[@contradevian]

They need to look for a bigger host.

The next time they all f*ck up, the government wouldn't be able to afford to bail them all out.

I guess that is the calculation they have made at the top of HSBC - there is no guaranteed bailout for them.

If the bankers screw up in Hong Kong, with any luck they will go before a firing squad.

[lulu]

It's better than Dairy Milk.

I dunno, I am quite partial to a bit of Toblerone.... the bigger the better

[_w_]

...it's probably being outsourced to India ....a variable cost which can be reduced.....

I must have missed the bit where India, Brazil and China had to build their megabanks before they could experience their tremendous growth and success.

Edited November 7, 2010 by _w_

[MrPin]

If the bankers screw up in Hong Kong, with any luck they will go before a firing squad.

Yes, HSBC, the HongKong and Shanghai Banking Corporation would be better off in China!

[dalkent]

they are not going to phsically up and leave. Just change thier headquartes where most the tax will be paid and most likely move the highest earners. So they will still be here doing the same business just not paying the same level of Tax.

[LuckyOne]

I must have missed the bit where India, Brazil and China had to build their megabanks before they could experience their tremendous growth and success.

http://www.bcentral.cl/estudios/banca-central/pdf/v3/031-084LevLoBeck.pdf

An interesting read. Their conclusion is that "financial intermediary development is positively and robustly linked with economic growth."

The relative maturity of capital markets in India may explain its performance relative to that of say Pakistan and Bangladesh.

I do agree that many banks have moved beyond their traditional role as intermediaries and have become large, risk taking machines. The two functions need to be split to ensure the long term viability of economic growth.

[LuckyOne]

they are not going to phsically up and leave. Just change thier headquartes where most the tax will be paid and most likely move the highest earners. So they will still be here doing the same business just not paying the same level of Tax.

They will always pay British taxes on the British part of their business.

Exposing their international earnings and the earnings of some of their employees to British taxes is discretionary on the part of HSBC. As the demands of British tax and regulatory authorities increase, it is only rational that HSBC will exercise their discretion in removing their exposure to taxes and regulations that they find oppressive.

[no accountant]

http://www.bcentral.cl/estudios/banca-central/pdf/v3/031-084LevLoBeck.pdf

An interesting read.

thanks, v interesting.

I do agree that many banks have moved beyond their traditional role as intermediaries and have become large, risk taking machines. The two functions need to be split to ensure the long term viability of economic growth.

hmm, not so sure it's that simple though. As I said before the biggest risk on almost all bank's balance sheets is their residential and commercial loan book. When they get write downs on these that's what brought them down.

So how would you separate lending for mortgages and business away from the banks? That's kind of that they do isn't it?

[blackgoose]

Im only surprised that they are mostly still here. If I was an American/ Chinese/ Indian banker having to relocate to Europe, I would much rather go to Switzerland with low regulations and low taxes.

Edited November 7, 2010 by blackgoose

[LuckyOne]

thanks, v interesting.

hmm, not so sure it's that simple though. As I said before the biggest risk on almost all bank's balance sheets is their residential and commercial loan book. When they get write downs on these that's what brought them down.

So how would you separate lending for mortgages and business away from the banks? That's kind of that they do isn't it?

I agree that the property loan books are very risky.

If taxpayers are on the hook for failures (which they certainly have been) then they have the right to demand lending standards and well run banks which make it less liely that they will have to bear the costs of failures.

Sensible LTVs, income multiples, debt service coverage ratios etc on the part of lenders as well as leverage and capital ratios at banks along with funding gap limits agross the entire maturity spectrum of the banks' balance sheets make sense.

The days of lending to people who will never be able to pay it back by massively leveraged banks riding the yield curve should be over forever.

[mattyfc]

This Should read "HSBC puts government under pressure by threatening to leave London". HSBC do not want to leave, the bankers like to have fun with their money, they want to be based in London. Hong Kong, Zurich etc far to boring.

They are trying to prevent financial regulations being introduced that would force them out. They will probably succeed.

[no accountant]

Sensible LTVs, income multiples, debt service coverage ratios etc on the part of lenders as well as leverage and capital ratios at banks along with funding gap limits

hear hear! Exactly. Agree with all of that. If all your points were implemented it would help a lot.

Consider as well though that the rocket fuel have powered all the liar loans and insane income multiples was simply: cheap money. Interest rates were far too low for too long. It's the most fundamental way to make sure the economy doesn't misallocate capital. If rates were 9% from 2000 to 2007 the would be no Buy-to-let boom. The cashflow wouldn't work.

I think of it like providing free booze at a big party. Yes you can make lots of small rules to try and keep it orderly, No Shouting, No Jumping in the Pool etc. But the chances are these rules will be broken (Liar loans). The root of it all is the free booze. Take it away and see the difference it would make!

Same for the flood of cheap money that was consumed in the housing boom.

I blame, primarily, the provider of free booze - central bank policy (and those who gave them their stupid targets)

[no accountant]

Lky1, have read some Steve Keen (Sydney Universtiy) :

Are we It Yet Jump to Figure 8. Scary stuff.

It shows the percent of aggregate demand that comes from debt finance. I.e. how much of the economy is actually just temporary, people taking equity out their house and buy a BMW etc. In time they will have to use their income to pay back the loan, which will subtract from demand in the future. The future is now. That's the main reason that fiscal or monetary stimulus won't work. The drop in demand is huge and unavoidable.

Edited November 7, 2010 by no accountant

[tim123]

I found the following statement bizarre

With regard to retail banking surely HSBC are be subject to the regulations of the countries where they have a retail banking license for their outlets. For other types of trading it will be the rules governing the local financial markets. US banks trading in London are subject to the identical rules as HSBC.

No.

Under the new EU rule, EU based banks will be subject to EU rules for their worldwide banking operation. American banks will be subject only to local rules.

I have to say that this rule does appear to tie one arm behind their back

tim

[Saberu]

I never said the banks charge loan rates near 0.5%. If I did, can you point me to where I said it? I said if they raise money at 4.15% and lend it at 5% that's not really profiteering is it.

But because of fractional reserve lending the 1% is really earning 5%. Besides I thought banks could create money out of thin air for loans and mortgages (or at least 5x deposits), so in reality they are making 5% correct me if I'm wrong.

[efdemin]

I never said the banks charge loan rates near 0.5%. If I did, can you point me to where I said it? I said if they raise money at 4.15% and lend it at 5% that's not really profiteering is it.

And why all the insults?

I think the government has stirred a up huge aggression towards banks to deflect blame from them or the regulators, The FSA's mission statement was to maintain financial stability. They truly f**ked up, and have avoided all blame, as did the politicians who set up the system.

First of all: apologies for being a bit aggressive before. But you seem to be posting as if you know how the banks work but it's clear that you don't really know any more than someone who's read the FT headlines for the last few years. So I thought you might just be a clever troll, throwing some credible info around to get people to bite.

My reply was to an earlier post where you said:

Actually, the banks lose more money with low rates. Most current accounts only ever paid 1% or something, so the banks where able to take the difference between the old rate of say 6% and what they paid us in our current account. i.e. 5% of pure profit.

Now they're screwed because they pay us 0.0001% but rates at 0.5% so they only make 0.49999%.

I was pointing out that what you said above, i.e. they're only making 0.49999% is false.

It was only after I posted my reply that you mentioned raising money at 4.15% and lending it at 5%, so how was I to know that unless I can see into the future? But since you raised it, it's cobblers; but it seems people have tried to point this out on the thread anyway.

[R K]

Without finance what will the UK do?

Prosper.

[South Lorne]

I must have missed the bit where India, Brazil and China had to build their megabanks before they could experience their tremendous growth and success.

...what's that got to do with the price of sugar...?....the subject was the civil service....

[no accountant]

It was only after I posted my reply that you mentioned raising money at 4.15% and lending it at 5%, so how was I to know that unless I can see into the future? But since you raised it, it's cobblers; but it seems people have tried to point this out on the thread anyway.

Yes, sorry no trolling. And I know a bit more than just reading headlines. Most of my clients are banks, so I've got a good idea, although I admit it's a bit second hand info.

And current accounts used to be profitable for banks. Now they're much less so as I said. But they don't raise much funding this way, so I guess I was talking about two different things. Apologies.

PS I'd a bit old for a troll. Joined this site in 2004!

Edited November 7, 2010 by no accountant

[no accountant]

Prosper.

I won't. I won't have job. Not a good one anyway.