HSBC share price: Top executives disappointed with headquarters decision

on Feb 18, 2016
Updated: Oct 21, 2019

Some of HSBC Holdings Plc’s (LON:HSBA) top executives in Asia have been left disappointed by the bank’s decision to stay domiciled in UK instead of moving to Hong Kong, Reuters has reported.

Europe’s largest bank announced last week that after an “exhaustive” headquarters review it had chosen London over Hong Kong, because of the UK’s “internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs”. At the same time the lender said that it remained committed to its “Asia pivot” strategy, which would see the bank shift up to $230 billion of assets saved by spending cuts elsewhere to the region, in order to boost investment in China and Southeast Asia. HSBC said that this outcome delivered “the best of both worlds”.

However, Reuters reported today that several top executives at HSBC expressed regret that the bank had missed an opportunity to further support its China-centred strategy.
“A move to Hong Kong would have sent very positive signals to the region in the longer term,” said a senior Hong Kong-based executive, who spoke to the newswire on the condition of anonymity.
HSBC has already seen an example of what China and its new overseas-focused investment drive has to offer – earlier this month the bank was chosen to be thesole international adviser to state-owned China National Chemical Corp on its $43 billion bid for seeds and fertilizer giant Syngenta. Reuters said that some members of HSBC’s management felt that a move to Hong Kong would have helped the bank win more advisory business, along with the financing for some of the huge infrastructure projects planned by the Chinese government. These executives believe that the Asian focus of HSBC’s strategy make Hong Kong a better long-term headquarters alternative than London, despite the near-term economic slowdown experienced in the People’s Republic.
In today’s trading, HSBC shares were down 0.6 percent at 454.25p, as of 12:30 GMT. The stock has fallen 15.3 percent since the start of the year and the company’s market capitalisation currently stands at £90.2 billion.
As of February 13, 2016, the consensus forecast amongst 27 polled investment analysts covering HSBC has it that investors should hold their position in the company. The same consensus estimate has been maintained since January 20, 2016, when the sentiment of investment analysts deteriorated from “outperform”.
As of 16:09 GMT, Thursday, 18 February, HSBC Holdings plc share price is 450.13p.