If HSBC goes, will there be double trouble?

Should I stay or should I go? Is it London calling for HSBC or will Hong Kong win the clash? As I’ve written before, we’re in a bad situation when banks can simply up sticks if they decide they don’t much like the rules where they’re domiciled.

Countries should be extremely wary of allowing banks to indulge in regulatory arbitrage. It can lead to the creation of “light touch” regimes to keep them sweet. Like the one the UK once had. RBS and HBOS were the result.

HSBC, with its apparent stability and the glut of deposits, might not look as though it poses the same sort of threat. But consider its history: sanctions busting, Mexican drug lords, a Swiss unit that helped tax cheats, foreign exchange rate fixing, PPI, and all those dodgy US mortgages that blew such a big hole in the bank’s finances.

HSBC is a huge bank that would rock more than just the casbah if the hubris that is its modus operandi were to morph into something more dangerous. That is why the efforts made to keep it in its safe European home are so worrying. Such as the Government’s “softly, softly” policy towards the City and the scrapping of the banking levy in favour of a more palatable profit tax. Has it learned nothing?

Of course, the bank says the decision will be made in the best interests of its shareholders. It will be interesting to see, if the decision is go, how they and HSBC’s executives feel after a few months without the clout that they enjoy here.

Hong Kong might be semi-autonomous, but China holds the whip hand, and the Chinese authorities won’t take too kindly to the sort of finger wagging that HSBC has indulged in here. Businessmen who push too far have had a habit of disappearing. Witness what has happened to publisher Lee Bo, who, like the HSBC chief executive Stuart “Pearl River Delta” Gulliver, is a British passport-holder who calls Hong Kong home.