Are we forcing the banks out of the UK as HSBC considers moving overseas?

[puisseguin]

Didn't Jaguar,Land Rover and Cadbury move because they were bought by overseas companies..I'm not sure this is quite the same thing..mind you are LR/Jaguar still here?

 

Midland Bank became an overseas company based in Britain when it was bought out by the Honk Kong and Shangai Banking Corporation. They just happen to have the corporate headquarter here despite doing 90% of the business overseas.

Most Jaguars and Landrovers are still made here but production is slowly being moved abroad. Many of the components used here are also made in overseas plants and brought here for final assembly.

[sharrowman]

"They should probably use the libor rate instead" Perhaps you can explain how the situation is different using the libor rate?

 

Cyclone, you haven't read the report have you? I think NEF know the banks are obliged to improve their balance sheet. The section I quoted from is about profiteering, not profit. but hey ho.

 

NEF suggests that "the largest five mortgage lenders have a market share of 82 per cent" Perhaps Tesco are reluctant to step in with so little market share?

[Wildcat]

This is very true, but they choose to have their headquarters in London and are listed on the UK stock exchange. This means that many high salaried employees pay taxes here. The bank pays its corporation tax here, and its shareholders pay tax on their dividends here. In all they probably provide upwards of £10 billion in tax to the UK exchequer.

 

HSBC International set up just across the water in Jersey, a well known tax haven, just happens to be a coincidental?

[websters gue]

Once again there is speculation that HSBC will move its headquarter out of London. Sharholders are suggesting that a move to Hong Kong would save costs and increase share prices.

 

http://www.express.co.uk/posts/view/232998/HSBC-tries-to-play-down-talk-it-will-leave-Britain

 

Those in the city that want light regulation and low taxes keep threatening to do this and their mouthpieces, such as The Daily Express, Boris Johnson and Angela Knight from the British Bankers Association as well as a few on here keep trotting out the bluff.

 

http://www.bbc.co.uk/news/business-12658880

 

http://www.efinancialnews.com/story/2010-10-14/tullett-prebon-staff-set-to-avoid-relocation

[hitch_1980]

HSBC International set up just across the water in Jersey, a well known tax haven, just happens to be a coincidental?

 

Probably not, but that is life / business......

[Rupert_Baehr]

HSBC International set up just across the water in Jersey, a well known tax haven, just happens to be a coincidental?

 

It's been there for years, AFAIK. All of the big four (prior to HSBC buying out the Midland) had local branches (and Offshore branches) in the Channel Islands.

 

NB: For anybody who thinks they will evade (not avoid, evade - the illegal one) UK taxes by opening an account in the Channel Islands - forget it.

 

The Channel Islands are not a part of the EU, but when they see an EU law which they like, they tend to obey it - often zealously.

 

If you are resident in any EU country and you have an offshore account in the Channel Islands, the bank will keep the tax authorities in your country of residence fully informed of whatever you earn in that account.:hihi:

 

Companies registered in the Channel Islands pay Channel Islands Corporation tax. Currently 0% (In Guernsey. It's probably the same in Jersey - it's certainly not lower )

[Rupert_Baehr]

Rupert Baehr asked "Would you prefer that banks shouldn't make a profit?"

 

it is not the profit but the margin that honks a bit of rank profiteering......from the same NEF report

 

"Using figures from Moneyfacts on the average rates offered for the

benchmark two year tracker mortgage since June 2007, we can see that

rates have fallen from 6 per cent to 3.5 per cent. But the Bank of England

base rate has fallen by much more – from 5.5 per cent to 0.5 per cent. We

calculate that the mortgage interest rate spread has therefore increased

from around 0.5 per cent to 3 per cent. As we argue above, some

readjustment in mortgage pricing was necessary, but even taking a

conservative view of long-term spreads as being around 2 per cent. The

increase to 3 per cent since the crash represents additional interest

revenue of around £1.6 billion per year from 2009 gross lending and a

further £1.5 billion per year from 2010 gross lending."

 

So if the spread has gone from 2% to 3%, then their income (not profit, they do have some costs) is 3%.

 

Have you ever heard of a company which makes as much as 3% before costs and taxes on gross turnover?

 

That's an amazingly high percentage, isn't it?:hihi:

 

What's the profit margin in a supermarket? Do you think they make anything like 3% (before costs and taxes)?

 

The amounts that banks make are high - but then again, they are rather big businesses. The profit margin - compared to other businesses - is nothing remarkable.

[Rupert_Baehr]

I repeat the assertion of a New Economics Foundation report, Featherbedding Financial Services, http://www.neweconomics.org/sites/neweconomics.org/files/Feather-bedding_Financial_Services.pdf.

 

They suggest a total £1.2trillion subsidy for the financial sector since 2007.

 

 

Thanks for that Sharrowman. Unfortunately, it's not an objective factually-based assessment of the banking industry, but rather a series of (rather strange) complaints apparently written by somebody who seems to have some very strange ideas. New economics indeed.:hihi:

 

I'm not going to go through the whole document; I'll just consider the first so-called 'subsidy' .

 

the government provides a public guarantee, effectively insurance against going bust. In business terms, this gives the banks a huge commercial advantage over other firms in a market system. It reduces their risk. This means that they can borrow money much more cheaply than if they were not ultimately underwritten by the public.

 

Errr... not quite.

 

The government does indeed guarantee each individual account (up to £50,000), but how is that a subsidy to the bank?

 

Interest paid is proportional to the risk taken.

Banks make their money from 'the spread' - the difference between the interest paid to the depositor and the interest charge to the borrower.

 

If the bank decides it wants a spread of 3% and the interest it pays to the depositor is 2%, then it will charge the borrower 5%.

 

If the government did not insure accounts up to £50,000 then the banks would indeed have to pay a higher interest rates to borrowers, because the risk in lending money to a bank would be higher.

 

If the government stopped insuring those accounts containing up to £50,000 and the bank had to pay the depositor 5% instead of 2%, then - because the bank is going to make 3%, they would charge the borrower 8%.

 

The account insurance scheme makes depositing money with the bank safer for the depositor (an advantage to him) and makes the loan rates lower for the borrower (an advantage to him.) It doesn't provide any subsidy whatsoever to the bank.

 

The bank makes 3% when its depositors accounts are insured by the government and it makes 3% when they are not.

 

For some reason the person who wrote the article doesn't seem to understand that.

 

If you are an investor who is able to accept a higher level of risk, then an insured account with a bank is not for you. (Such an investor might be somebody with a long-term goal; for example, somebody starting out on a long-term savings scheme or somebody starting an investment for a new-born child's university education.) If you're in either of those situations, you can accept more risk - because there is always time for any losses to be made good.

 

If, however, you are pensioner with savings and you are relying on the income from those savings to provide you with money to live on or you are getting near to being in such a position then you are - or should be - 'risk averse'.

 

By insuring accounts up to £50,000, the government provided a 'safe' (the only risk is inflation, because [effectively] the investment is backed by 'the full faith and credit of HMG ) investment.

 

If you are risk-averse then you have to accept lower interest rates ... interest is the premium for risk.

 

If there are no insured deposit accounts, then you are stuck with:

1. Buying gilts. (Backed by the full faith and credit of HMG)

2. Putting the money under your mattress (Use notes - coins are lumpy - and buy a very good burglar alarm)

or

3. Investing your money overseas in a country which does have insured deposit accounts. - The UK is not the only country to offer them, by any means.

[Rowan22]

Said 'usurping' being what, to make profit? And said 'terrorism' being to take business and profit elsewhere... Hmm, strange, they sound nothing like usurping or terrorism at all!

 

Depriving ordinary people of the means of making a living is economic terrorism. Or do you prefer a nice easy cause and effect correlation, like some storm trooper coming into your home and emptying the food out of the fridge> A straightforward uncomplicated tyranny. Where as an economist and a politician in cooperation with organised crime corporations is a bit more complex, but your family will still be just as hungry.

 

We should judge the results of actions as a guide to whether or not they are unjust. If greed causes misery, then stop the greed and re establish a moral imperative which protects people, society and the environment.

[Jason Bourne]

HSBC is an overseas company - which moved to the UK when it bought out Midland Bank.

 

Yes, I always thought HSBC was the Hong Kong and Shanghai Banking Corporation.

 

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