HSBC is to move its chief executive to Hong Kong from London as the "centre of economic gravity" shifts from West to East, the banking giant said on Friday. HSBC, founded in Hong Kong and Shanghai in 1865, would remain headquartered in London and regulated by Britain, while CEO Michael Geoghegan would relocate in February to be nearer the group's "largest and most important region" of operation.
"There is absolutely no question of HSBC pulling away from London. We will operate from two equally strategically important centres for the company," chairman Stephen Green said in a statement. "The additional management presence in Hong Kong and focus on our faster-growing markets is absolutely right for HSBC and entirely consistent with the strategy we set out in 2006."
HSBC, Europe's biggest bank, added that Geoghegan would also become chairman of the group's Asia business. "Operating from Hong Kong, the hub for HSBC's Asia-Pacific business ... Geoghegan will be located in the group's strategically most important region, with a focus on ensuring its growth potential is fully realised," HSBC said. "HSBC Holdings Plc, the group holding company, remains domiciled in the UK and has no plans to move. It will continue to be resident in the UK for tax purposes."
HSBC, reflecting its origins as the Hongkong and Shanghai Banking Corporation, added that the move "further positions the group for the shift in the world's centre of economic gravity from West to East."
Green told a Hong Kong press conference: "Nothing that's happened in the financial crisis, and the difficulties over the last two years, changes our view that that trend is going to continue. "Indeed, if anything, it's accelerated by the crisis," he added.
The outlook had been very different for HSBC 20 years ago. Viewing Europe then as vital to the group's future, HSBC Holdings plc was formed in 1991, with its shares quoted in London and Hong Kong.
In recent years and prior to the current economic downturn, the bank switched attention back to Asia, notably by investing in China. "Operating from Hong Kong, I will be on the ground in our largest and most important region," Geoghegan said in Friday's statement. "The move we are announcing today mirrors the shape of our business, as well as reflecting our deep roots in Asia and Hong Kong."
John Tsang, Hong Kong's Financial Secretary, said the relocation "highlighted Hong Kong's growing status as a global financial centre in the Asian time zone" and represented "a clear vote of confidence in Hong Kong as an international financial centre." Speaking to reporters Green reiterated HSBC's interest in a public listing in China but stressed it was not a reason for moving Geoghegan to Hong Kong. "We will be interested in a Shanghai listing if the authorities allow foreign companies there," he said.
"We are expanding our branches throughout China. We are expecting to have around 100 (branches) by the end of this year. That will make us significantly the largest foreign player in the mainland Chinese market," added Green. Geoghegan's switch comes as HSBC, like its peers, seeks to build up its capital reserves after suffering huge losses from the US housing crisis fallout. Last month, HSBC reported that its first-half net profits slumped by 57 percent to 3.35 billion dollars (2.35 billion euros) as bad debts ballooned to nearly 14 billion dollars.