LONDON — HSBC CEO Stuart Gulliver, two days before the British election, has criticised British policy makers for driving out global banks with higher taxes and tougher rules.
"The UK has rejected the concept of universal banking," Mr Gulliver told reporters on Tuesday after the bank posted a 4% rise in first-quarter profit. "We are under significant pressure from our shareholders, who don’t understand the extent to which their dividend and the growth of the company is being set back by what they perceive to be the wrong location."
Europe’s largest bank is weighing whether to move its headquarters out of the UK, where rising taxes and regulations that will force it to put a firewall around the British consumer unit threaten to hurt earnings. Mr Gulliver is also under pressure to reduce costs, sell assets and improve profitability.
He will update investors on his plans on June 9.
"I wouldn’t go by what management has to say on domicile before elections," said Chirantan Barua, an analyst at Sanford C Bernstein in London. "Investors will be looking to the bank’s strategy day in June."
HSBC, which generates most of its earnings in Asia, said last month it had started a review of its headquarters after it was hit the hardest by Chancellor of the Exchequer George Osborne’s budget, with tax increases costing banks £5.3bn over the next five years.
Mr Gulliver said HSBC was considering moving some securities activities out of the UK, adding that the discussions about redomiciling the lender were "not a threat".
"It’s a very objective review based on economic arguments around what we need to do to deliver returns to the owners of the company, who are the shareholders," he said. "The movement in the share prices after the annual general meeting, when we said we were going to look at this, would tend to indicate that their view is that there are better places to headquarter the holding company."
HSBC’s review into its domicile will take "months not years" and won’t be completed in time for the strategy day next month, according to Mr Gulliver.
Hong Kong was capable of regulating a bank of HSBC’s size and it already oversaw most of the bank’s profit, the CEO said.
While legislators have toughened their rhetoric before elections, British banks have also been faced with increased scrutiny in the wake of the financial crisis. HSBC, which has assets of $2,7-trillion, is among lenders required to split consumer banking from riskier trading businesses by 2019.
HSBC said on Tuesday that first-quarter pretax profit rose to $7.1bn, beating the $5.8bn average estimate of five analysts compiled by Bloomberg.