Pretty bad news. Doesn't bode well for the future of their HQ in London.
Quote:
Originally Posted by heero_yuy
It's only the start, with the rise of alternative funding sources such as peer-to-peer that are much more efficient the banks will have to significantly cut the difference between deposit and loan rates to survive. That means less staff, buildings and lower profits.
If that means an end to the obscene bonus culture that caused much of the banking chrisis I for one shall not shed a tear.
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The likes of HSBC will be ok. The day-to-day retail banking that peer-to-peer will 'disrupt' is relatively small fry for them. Most of HSBC's business comes from Asia and Investment banking. The reason they may leave is probably not because the average family is deciding to go elsewhere to deposit their few thousands pounds but because we're taxing them on their entire profit with the banking levy.
As I said most of their business is in Asia but the Levy is applied to the entire profit generated by the bank so they're making the money over there and getting taxed here. It doesn't make sense for them to let that continue. The UK operation isn't irrelevant but it's not critical either.
Osborne may change the rules so it only applies on UK profit in a speech tomorrow which might help them stay. He probably should do it as the UK really shouldn't be losing one of the biggest banks in the world to Hong Kong. A smaller tax income is better than none at all after all.