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Original poster

If a major bank was to leave...

46 replies

meditrina · 06/03/2011 10:57

...HSBC has (maybe) been considering UK. Today's news seems to suggest this has (once again) been ruled out for now.

But I was struck by the amount this bank does pay in tax: about £1.2billion for 2010, as a corporation (so whatever individual staff pay in personal taxes would be in addition). to Independent article.

Now I've seen many, many comments here on banks, bankers and their role. I don't really want to open up a bank-bashing free-for-all, but was wondering - can UK afford it if any of the big banks leave?

OP posts:
expatinscotland · 06/03/2011 10:59

Of course they can. It's not just banks who avoid taxes.

Original poster
meditrina · 06/03/2011 11:08

I've no idea about whether there are any taxes avoided in this. It's the potential loss of the tax they are currently paying I was thinking about.

OP posts:
Chil1234 · 06/03/2011 11:13

It's not 'can we afford it?' but 'what can't we afford any more?' if we lose a significant source of revenue and don't have something ready to replace it. I don't know what £1.2bn represents as a proportion of GDP but, to put it in context, it's 3% of the defence budget or about 1% of the NHS budget. Knock-on effects would be unemployment, direct and indirect. I think more worrying than one bank pulling out, however, would be if it set a trend and if London stopped being 'the place to be' for financiers.

FakePlasticTrees · 06/03/2011 11:20

As a nation we'd cope if one went, but - it's not just the tax that one bank would cost us, it's the unemployment, the companies (law firms etc) who provide services to that bank etc. If it was a trend, then London would be stuffed. And as London 'subsides' the rest of the country, then we'd all be stuffed.

Still, house prices would start falling dramatically in the South East and we might pick up a bargain (assuming we both keep our jobs) so not all bad...

Original poster
meditrina · 06/03/2011 11:57

It seems big enough single loss to have a direct impact on the Government's spending programme (aiming for cuts of about £81billion by 2014/15). Is that likely to be the case?

HSBC were one of the banks that did not require any bail-out, and IIRC their relisting in London when they left HK in 1992 (?) was hailed as a sign of confidence in The City. Would their move send a particularly pessimistic message?

OP posts:
Chil1234 · 06/03/2011 16:00

Yes it would be a bad message if an influential player shipped out. Commerce turns on confidence and, like the impala at the watering hole, if one sniffs the air and bolts, others will follow. Other industries can be built up to compensate for the loss long-term but, short-term it wouldn't be easy. Still... I'll now be accused of being a 'Tory stooge' or something. Such is life :)

glasnost · 06/03/2011 16:44

GOODBYEEEEEEEEEEEEEEEE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Original poster
meditrina · 06/03/2011 16:49

How would we make up the £1.2 billion lost revenue? Would we need further cuts?

OP posts:
glasnost · 06/03/2011 16:55

By taxing the rich til their eyes pop out.

southeastastra · 06/03/2011 16:55

we'll all have a whip round - i'm sure i can find 5p under the sofa to help them out

JessRabbit · 06/03/2011 16:58

Then when you've taxed "the rich" till their eyes pop and they leave the country what will you do for for money then?

TheCrackFox · 06/03/2011 16:58

So if we don't do as they tell us they are going to leave. Quite frankly, anyone with a bank account with this lot should move their account in protest.

The financial sector in this country is as very bit annoying as the unions during the 1970's. They seem to think nothing of holding the govt./taxpayers to ransom.

Original poster
meditrina · 06/03/2011 17:12

TheCrackFox: it's part of what I'm asking. I hadn't realised the size of the immediate price tag if this one bank were to move.

What are the repercussions for a drop of that size in tax revenue, and what would really be needed to counter-balance it?

I don't think we have enough uber-rich to deal with a gap this size.

OP posts:
Chil1234 · 06/03/2011 17:51

If companies have got any sense and if their business is not location specific they go where the trading conditions are most favourable in order to keep growing. One of my bigger customers has their accounts and IT departments based in India, for example, presumably to take advantage of lower costs. It would be unusual if big companies didn't lobby governments to get a deal and it would also be unusual if governments didn't try to persuade business to stay here.

"What are the repercussions..."? The obvious counter-balance would be that we'd need >1.2bn from somewhere else. That's either more tax revenue from individuals, companies or a new business moving in to fill the gap... or it means another squeeze on public spending.

Niceguy2 · 06/03/2011 18:29

Yes, if HSBC moved out then it would have a devastating impact on UK PLC. Partly because of the loss in tax revenue but also it would prompt other banks who are large multinational's to also consider their position.

I'm sure the average joe in the street won't even know what the initials stand for. There's absolutely nothing holding the bank here other than location and (in the past) a favourable tax regime. Given Hong Kong has one of the lowest tax rates in the world & one of the most pro-enterprise economies, in my opinion, it is a real danger that HSBC will move.

Then what? Barclays? I think I read somewhere a while back they'd appointed a US guy to some senior role (chairman/CEO/cant remember) and there was speculation if they'd stay as Barclays is another bank with no real need to stay based in UK.

In fact, the only banks who need to stay would be the likes of HBOS, Lloyds etc. The very banks personally I'm not too fussed about.

Niceguy2 · 06/03/2011 18:33

They seem to think nothing of holding the govt./taxpayers to ransom.

Crackfox. I think you'll find its more likely the other way around. We've been so busy banker bashing and finding ways to "make them pay" that they've probably got rather fed up and now wondering why they are bothering to stay if they are so unwelcome.

There are PLENTY of countries who would welcome HSBC with open arms (and lots of subsidies).

JessRabbit · 06/03/2011 18:45

"Lots of subsidies" Dh and other people in his "financial" industry were offered a tax cap to work in Singapore, this was a few years ago and I have no idea if it still applies.

If they will offer that to individuals imagine the sweeteners that are offered to massive multinationals.

sharbie · 06/03/2011 18:48

lots more jobs will be lost too - they are a massive employer

rabbitstew · 06/03/2011 19:08

Even in this day and age, the fact we speak English, are mid-time zone extremes, are politically stable and have a history in financial services still makes it a very risky idea for any of the banks to pull out altogether and move elsewhere. London is also still quite a fun playground for the hugely wealthy.

mpsw · 06/03/2011 19:17

Less than 10% of HSBC's business is in UK.

It only came to Britain in the early 90s because of concerns about the future of Hong Kong post-handover. With those fears now allayed, I should imagine they would be welcomed back most rely to their original home.

SardineQueen · 06/03/2011 19:25

On the retail banking side it might leave room for new companies to grow - most of the retail money is in the big 4 (or 5?) and there's not much competition. Woudl be great if smaller mutuals and building societies were able to grow as a result.

On the investment side - I guess it's a bunch of city jobs lost - I know someone who works for them in canary wharf - TBH I think that those people would mostly find alternative employment fairly easily or go with them.

So it wouldn't be a disaster in my view.

Niceguy2 · 06/03/2011 19:27

Well Hong Kong is politically stable. The Chinese government have no desire to ruin the golden goose that is Hong Kong.

English speaking? Well that's hardly unique anymore. I work in he outsourcing industry and there are lots of countries nowadays who can speak English without difficulty, are easy to understand and without the accents which are associated with indian call centres.

So that leaves timezone. I guess that's a good thing that highly paid bankers won't want to be waking up to do the graveyard shift like many indian call centre staff will. But there does come a point where timezone alone won't save us.

wubblybubbly · 06/03/2011 19:47

"I think you'll find its more likely the other way around. We've been so busy banker bashing and finding ways to "make them pay" that they've probably got rather fed up and now wondering why they are bothering to stay if they are so unwelcome."

Aw, diddums. They must have pretty thin skin at HSBC.

I can't link to the article, so can someone tell me just how much extra they claim they'll be paying? Or is this just the same old rhetoric they've been feeding us for the last six months?

Original poster
meditrina · 06/03/2011 20:35

If they went, they believe it would raise their share price by about 30% according to this report v a new UK levy which would cost it c.£370 million in addition to the £1.2billion it's already paying. I can't find anything about how much tax it would pay if it returned to HK. That report also says HSBC reviews whether to stay in London every 3 years.

I'm heartened (though a bit surprised) by Sardine's post that the effect of the loss of £1.2b wouldn't actually be so serious.

OP posts:
Niceguy2 · 07/03/2011 09:12

"Aw, diddums......"
Will you be saying the same thing when we're facing even more cuts or having to find MORE tax?

Meditrina. I guess 1 bank leaving on its own would be quite a blow but survivable. What we don't want though is to open the floodgates. Financial services is something we're supposed to be good at. We do need to diversify as we're too reliant upon one sector but the last thing we need is to lose a large part of this sector before we've built up our economy elsewhere.

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