Why is HSBC contemplating moving its markets business to Paris?
One of the less noticed news items over the weekend involved the UK-based financial services monolith that is HSBC.
According to Mark Kleinman of the Financial Times, Stuart Gulliver, head of investment banking at HSBC, has been looking at the possibility of moving his bit of the business to Paris.
Specifically, Kleinman said Gulliver has been, "examining a proposal for a separately capitalised French subsidiary that could house [HSBC's] global banking and markets activities."
If true, this should be more than sufficient to encourage happy delirium in La Defense, where Nicholas Sarkozy has had a policy of promoting Paris as a financial centre for a while. HSBC employs around 21,000 people in its investment bank globally.
What might be encouraging Gulliver to peruse Paris (of all places)?
Arnaud De Bresson, managing director of Paris Europlace, an organisation which promotes Paris as a financial centre, points to recent initiatives to push the city as a centre for bond trading. He says there's also the strong regulatory environment, and tax breaks for ex-pats.
"We have very regular contact with HSBC," says Bresson. "The reforms and developments that Paris are introducing, particularly around corporate bond markets, are an important issue for international banks."
As we noted a while ago, people earning 250k are now better off (after tax) in Paris and Frankfurt than in London.
Maybe it's the banking levy too?
Personal taxes aside, as of last week, Paris also looks fairly attractive from the banking-levy perspective.
Christine Lagarde has said that she expects a French banking levy to raise between $360m and $1.2bn.
Proportionately, the UK's levy, at $3.8bn, looks far more harsh: the market capitalisation of the three biggest French banks is $128bn; in the UK it's $275bn, but the levy is three times higher. HSBC has been widely identified as one of the banks likely to be hardest hit.
In reality, however, HSBC's investment bankers will probably have no need of moving to Paris soon.
Kleinman said Gulliver's plans are contingent on UK policy changes such as an enforced separation of retail and wholesale banks. Predictably, Hong Kong is also in the running as a relocation option.
A spokesperson for HSBC declined to comment on Kleinman's claims, except to say that HSBC reviews the location of its HQ every few years and this was just, "market tittle tattle."
