The Daily Telegraph is surprised by Lord Myners‘ suggestion that HSBC should relocate its centre of operations to Paris to avoid the new UK banking regulation system. Myners said:
If I was the director of HSBC, I would simply cease to do business in the UK through HSBC plc which is the old Midland bank, and I would instead do it through CCF, their French bank, which can be passported into the UK, and thereby avoid all the extra capital requirements that [the new system] is putting on me, and also avoid the UK bank levy.
It sounds bad, but in fact, this is a pretty strong argument for Sir John Vickers’ proposals. If you were a UK banking regulator looking at some of the vast global banks headquartered in the relatively small UK, you might think (as the Swiss have) that forcing them into the arms of the Eurozone regulators is not such a bad thing.
After all, it’s not like shifting the bank’s headquarters will mean it closes branches or relocates many staff. It may even just mean switching board meetings and a few support staff, depending on how seriously the bank wants to make the shift.
The payoff for that small loss is a huge gain – that HSBC and others suddenly become the European Central Bank‘s risk, not the Bank of England’s.
If you were that regulator – Mervyn King – you would want to proclaim loudly what a great place the City still was to do business, but over the bone-china tea service, in private, you’d smile quietly to yourself.
