AMSTERDAM: HSBC has raised the prospect of spinning off its UK retail business after warning that it would be “uncomfortable” if new regulations stopped it keeping control of the division’s capital and management.
The bank’s admission that it would contemplate the move is the second time in a fortnight it has threatened a change to its corporate structure if it decides new bank rules are too strict.
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In late April, Douglas Flint, HSBC chairman, told the bank’s annual meeting that it was examining the possibility of moving its headquarters, because of tougher City regulations since the financial crisis.
Like all large British financial institutions, HSBC will have to carve out its UK retail banking unit into a ringfenced entity by 2019, under the Vickers reforms. It has started work on this already and recently said the retail unit, which will require separate financing and a standalone board of directors, will be based in Birmingham.
But Stuart Gulliver, chief executive, said that if the final ringfencing regulations were too “electrified” — preventing the bank from having much influence over the retail operation — then HSBC would have to consider its options.
“What would be uncomfortable is if we were a majority shareholder in a bank where we have no control over capital or management decisions,” said Mr Gulliver. He added that while the rules were still being worked on, it was “way too early” to make any decision on a spin-off.
Analysts have speculated about the future of HSBC’s UK operation since the Financial Times reported 18 months ago that the bank was considering a spin-off plan.
