♠ Posted by Emmanuel in China
at 4/29/2015 01:30:00 AM
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| Parting is such unsentimental indifference. |
In the meantime, ponder some comments. The Hong Kong Monetary Authority--obviously the financial services regulator in the Chinese Special Administrative Region (SAR)--says it is ready to welcome HSBC despite its gargantuan stature relative to the size of Hong Kong's economy:
So that's the diplomatic answer from the HKMA. That is, there's no need to worry about the matter until the paperwork begins to be filed for the move. While cautiously suggesting that it is up to the task of regulating an HSBC-sized behemoth, it remains noncommittal at present about the increased resources it would need to marshal if HSBC does move to Hong Kong.HSBC's $2.6 trillion balance sheet is nearly eight times the size of Hong Kong's economic output. So the HKMA would have to scale up its regulatory operations, analysts and regulatory experts said. "Can HKMA regulate an institution the size of HSBC? They would have to hire in more staff, expand the scope of their coverage and communicate more with other regulators," said Jim Antos, bank analyst at Mizuho Securities Asia Ltd in Hong Kong...The HKMA said on Friday it would adopt a "positive attitude" should HSBC return to the territory. On Monday, an HKMA spokeswoman said the regulator could not comment in detail on its ability to regulate a bank of HSBC's size. But the size of HSBC relative to Hong Kong's economy should not be a cause for concern because international regulators are devising rules for resolving bank failures without using public funds, she said.
On the other hand, I am more amused by Bloomberg View saying that for the UK, it's goodbye, good riddance, and don't let the door hit you on the way out. In other words, there isn't much point in groveling for HSBC to stay in the UK given its laundry list of nefarious activities:
There’s nothing wrong with companies reviewing their affairs, including which country they choose to hang their brass plaque in. But threatening to leave in a fit of pique every time there’s a threat of increased regulation or a nudge in taxation smacks of teenagers threatening to run away from home because a curfew is too early or performing household chores are too tedious. And HSBC in particular is becoming a bore by regularly trying to blackmail the U.K. authorities.
It may make sense for HSBC -- which started life a century and a half ago as the Hong Kong and Shanghai Banking Corp. -- to move. It's been based in London as a result of its purchase of Midland Bank a bit more than two decades ago. But it made more than 78 percent of its 2014 profit in Asia, compared with just 3.2 percent from its European operations; the figures for 2013 were 70.3 percent and 8.1 percent, respectively.
HSBC seems to hold the mistaken belief it’s doing the U.K. a favor by hanging its hat in London. The levy has been increased eight times since it was introduced in the middle of 2010, which feels excessive -- until you remember that HSBC’s Household Finance unit played a leading role in the U.S. subprime mortgage debacle that triggered the global financial crisis; that U.K. banks have paid billions of pounds in fines for malfeasance in everything from rigging Libor to mis-selling insurance to their retail clients to arranging dodgy swaps for their corporate customers; and that the easiest way to reduce your levy payment to the U.K. government is to shrink your balance sheet.I guess there's only one way to find out whether the British can really be so blase about letting HSBC so easily--and whether Hong Kong really wants to bring in this colossus and the regulatory challenges it brings.
