Myners: HSBC retail bank should go to Paris

By James Quinn, Deputy Business Editor, Sunday Telegraph

In one of the most revealing comments made since the publication of the ICB's final report on September 11, the ex-chairman of Gartmore and Marks & Spencer argued that the bank should do all that it can to avoid the ICB's ring-fence, which would force it to separate retail deposits from its commercial operations.
 

HSBC is the British bank thought likely to be the most affected should the recommendations, which were published last month by chairman Sir John Vickers, become law.
 

Lord Myners made the comments at a discussion organised by the Association of Corporate Treasurers last week, but his words have not been reported until now.
 

He said: "I've said HSBC would want to consider, or I suspect will consider, moving its holding company. 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 Vickers is putting on me, and also avoid the UK bank levy."
 

He went on to say it was "blindingly easy" to spot the loopholes in the Vickers report, and noted that given the UK would be alone in implementing such stringent measures, the opportunity for regulatory arbitrage is high.
 
His words come six months after The Daily Telegraph first disclosed that there had been meetings between the French authorities and the bank's representatives.
 
At the time it was thought the French regulators were trying to entice the bank into re-domiciling the whole group in Paris – ahead of its triennial domicile review of the entire bank – but it now appears the discussions may just have related to a relocation of the UK retail bank. Number 10 also appears to have been warned that a move to France by HSBC was a possibility.
 
Banking sources suggested Lord Myners' comments were "well thought through" and "clearly very germane". However other sources suggested that such a move was not something actively being looked at by the bank, which is taking part in a sector-wide consultation with the Treasury.
 
Although there is no suggestion that Lord Myners was acting as an out-rider for HSBC, with whom he has no formal or paid connections, it is thought he may have run his thoughts past other leading City figures.
 
As City minister during the 2008 financial crisis, he would have liaised closely with Douglas Flint, then HSBC finance director who is now the bank's chairman and was at the forefront of behind-the-scenes lobbying of the ICB.
 
Mr Flint is thought likely to meet Treasury officials before the end of the year to discuss the ramifications of the ICB report, and any subsequent legislation.
 
One of the reasons HSBC is believed to be concerned by the findings is because of the need, under the ICB, to separate UK retail deposits and loans from its corporate book, which could have major implications on the amount of money it can lend to large corporate customers.
 
Meanwhile the bank is this week expected to drop "the world's local bank" as its slogan for the first time in nine years, as first revealed in The Sunday Telegraph in May.
 
Instead the bank is preparing to roll out a new advertising campaign which will focus on being "part of the new world" with HSBC.
 
A key part of chief executive Stuart Gulliver's strategy review in May was the admission that HSBC can no longer be all things to all territories. An HSBC spokesman declined to comment. Telegraph