HSBC negotiations

The splash in the Torygraph today about HSBC potentially relocating to Hong Kong is interesting for a couple of reasons. First, I suspect that there are several large dollops of spin involved here. I mean given HSBC's history and its desire to build up market share well away from the UK it wouldn't be surprising if it decided to relocate its headquarters in any case.

But given their position it's not surprising if they decide to exercise a bit of pressure anyway. The non-denial given to the BBC actually just adds to the uncertainty, which makes me more suspicious that HSBC is negotiating via the media. Nothing new as a tactic, but a reminder certainly that banks feel they are able to dictate terms again. Whilst the reaction of many members of the public will be 'let 'em go', you can bet Osborne got the message.

The second thing to note is the role of shareholders in both stories. In the Torygraph version they appear to have been caught on the hop, one says they were "very surprised" that leaving the UK was being seriously discussed. But in the Beeb version, which uses HSBC's own words, the implication is that shareholders have encouraged the bank down this path:

"...in light of possible regulatory changes and additional costs such as the bank levy, being increasingly asked by shareholders and investors about the likely additional cost of being headquartered in the UK."

Not great either way. Version one sees the owners of an economically and politically important business being told what to expect, rather than setting the agenda. What's more, their apparent capitulation to arguments put forward by the bank gives you a good indication of the gulf between the views of the 'shareholders' as they are commonly understood in the City (fund managers) and 'shareholders' in the sense of beneficial owners (us lot). Version two is even worse - shareholders are encouraging our banks to relocate to avoid the bonus tax etc - but I suspect it's not very accurate.