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Morning Coffee: Why HSBC should NOT shift to Hong Kong, by UBS

HSBC should not move HQ to Hong Kong, says UBS

Don't move here

Excited by the prospect of HSBC potentially moving its headquarters from London to Hong Kong and by the firm basing more senior banking jobs in the city as a result? Don’t be, says UBS.

In April we noted eight reasons why the move makes sense for HSBC. Now analysts at UBS, in a 58-page report, have outlined why relocating is “certainly the wrong answer”.

“Over time, the financial flows between Hong Kong and China will continue to increase dramatically, the HK$ will almost certainly end up linked to the Renminbi rather than the US$ once the Chinese open up the capital account and the large Chinese banks will likely regard Hong Kong as just another large Chinese city in which to do business,” says the UBS report, quoted in the Wall Street Journal. “The dominance of HSBC in Hong Kong is now in decline in our opinion.”

And even if HSBC were to move its headquarters to Hong Kong, it would need to first shed the non-core elements of its business, such as its mid-level European investment banking business, in a similar way to RBS’ recent pull-back from investment banking. “Simply put, if the diversification from the journey of the last 30 years was the wrong strategy to have executed, does it make sense to take the accumulated baggage back home with you? We think not,” says UBS.

Meanwhile:

People’s Bank of China calls for more reform to foster capital markets development. (South China Morning Post)

China to ease limits on overseas investments to advance its goal of making yuan a reserve currency. (Wall Street Journal)

Hong Kong equalities watchdog to train bank staff on anti-discrimination laws following cases of ethnic-minority customers facing obstacles opening accounts. (South China Morning Post)

Asian banks well-placed to grow in new regulatory environment, says MAS. (Channel New Asia)

Singapore’s total bank lending fell in April. (Straits Times)

Why DBS is building a beach. (Straits Times)


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