I was recently at an HSBC event in Asia where the host of the event said: “you know why the HSBC Chief Executive has moved to Hong Kong don’t you? Because the tax rate is 34% less than London’s so we save millions on his salary!” It was a joke of course, although the meaning is clear: with Hong Kong tax rates at 16% compared to London’s 50%, where would you want to be based?
Since then, there has been massive speculation about whether HSBC would move lock, stock and two smoking barrels to Hong Kong. Equally, what about Standard Chartered? Wouldn’t a move to Singapore or Hong Kong make sense for them? And Barclays? Now that American investment banker Bob Diamond has been confirmed as CEO-in-waiting, why not make the bank a Wall Street powerhouse like Goldman Sachs and dump the boring retail stuff?
This leads to a bigger question: the City of London has only been attractive for finance due to its openness, ease of doing business, skills base and low tax; as the government attacks all of these areas and makes it less attractive, will international banks leave? And will Asian and other newer banks still want to be based here?
In other words, give it five to ten years, and the real question will be whether London still leads the world as a Global Financial Centre, figures in the top three alongside Wall Street and Hong Kong, or slips back into lower depths and takes the British economy with it.
Obviously, the worst case scenario is untenable, but it could happen due to unintended consequences if the government’s most extreme approach succeeds, as in tax the banks to hell and back.
In order to debate this question, we have one of the most pre-eminent City guardians Sir Stephen Wright, former CEO of International Financial Services London and Special Advisor to TheCityUK.
Sir Stephen will be our guest keynote speaker at the Financial Services Club next Wednesday, 27th October, where he will present his views on the future of the City of London in an evening chaired by Sally Muggeridge.
Sir Stephen is a pecial advisor to theCityUk and Chief Executive of the International Financial Services London (IFSL) and was formerly the British Ambassador to Spain and the Principality of Andorra. He was educated at Shrewsbury School and Oxford University where he studied modern history. He previously worked for the Foreign and Commonwealth Office in London, and has served in Washington, D.C., Brussels, New Delhi and New York. His first overseas post was to Havana.
Sally Muggeridge was Chief Executive of the Industry and Parliament Trust until recently, and has just been elected to the House of Laity at the General Synod to the Church of England representing the Diocese of Canterbury. In a varied and full business career, she has had considerable experience working at a senior level in major international companies including BT, Cable and Wireless and Pearson.
If you wish to attend the event, then please register here as a member or non-member.