HSBC Headquarters review is all about tax avoidance
HSBC bank has been based in UK ever since it took over Midland Bank in 1993 but the bank was born in Hong Kong and it looks like its headquarters is headed back East.
The bank has traditionally reviewed its head office location every three years, this morning the bank has announced due to "regulatory and structural reforms" it will do so again.
Appropriately enough, this is all about tax avoidance.
At heart of this is the government's bank levy - the tax large banks pay on their balance sheets.
The tax was set up in 2011 and the rate at which it is paid has gone up nine times since, most recently in last month's Budget.
The bank levy was introduced as a means of raising money and discouraging banks from ever again pursuing the sort of reckless lending that triggered the financial crisis in 2007.
Last year the tax raised £2.2 billion, one third of it (£740m) was paid by HSBC - a bank that, unlike Lloyds and RBS, did not require taxpayer support in 2008. "HSBC stands for 'Hasn't Sought Brown's Cash'" joked Rory Bremner at the time (when Gordon Brown was Prime Minister).
Therefore, by moving it's headquarters away from the Britain HSBC would save itself - and its shareholders - hundreds of millions of pounds.
The bank would continue to pay a bank levy on its British operation. It would continue to pay corporation tax on British profits.
There may be impacts. If the, highly paid, executive team ends up in Hong Kong (surely the most likely destination) they will pay income tax and national insurance there. HSBC may also decide to begin sourcing the other services it needs (advertising, accounting, legal) in Hong Kong rather than London.
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The Bank of England would continue to act as lender of last resort for the British business but would insist that it is financially ring-fenced from the rest of HSBC's global operation.
An election campaign is in full swing. This morning Labour is focusing not on how HSBC is taxed (remember it is proposing an even higher tax on banks) but on comments Douglas Flint has made about Britain's membership of the EU.
Flint is clear that he wants Britain to stay in the EU: He is focused on his bank's prosperity - not Britain's - but he warns of the risk of "going it alone".
His comments will be interpreted - correctly - as pretty clear criticism of the Conservative's promise to hold a referendum on EU membership.
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