HSBC’s board is expected to come to a decision on the location of its headquarters in the coming days after an unexpectedly long-running review of the future of the British-based bank, as revealed by the Telegraph last month.

Bosses launched the review last year and initially expected to reach a conclusion by the end of 2015. Investors are increasingly convinced that the bank will not quit the UK.

But the decision proved unexpectedly tough to pin down, as board directors asked for ever-increasing amounts of information on the relative merits of London compared to other financial centres.

Locations including Hong Kong, Singapore, the US, Frankfurt and even Canada have all been hinted at as possible alternatives, but because much regulation in the industry is global, it has proved hard to find compelling arguments in favour of leaving London.

It is now thought that the directors may be able to finalise their plans before the lender’s full-year financial results on 22 February.

In announcing the review, chief executive Stuart Gulliver and chairman Douglas Flint were particularly concerned by the way banks have been subject to increasing amounts of tax and regulation in the UK and the EU. Some major investors such as Standard Life backed the idea of leaving, but others, including Hermes, did not.

Often the tough treatment was justified as retribution for the financial crisis and the collapse of several banks – even though HSBC itself did not get into trouble in the crisis.

One very tough measure was the introduction of the bank levy in 2010, a tax which is based on any UK-based banks’ global balance sheet. In effect this penalised banks such as HSBC and Standard Chartered which are domiciled in the UK but have most of their operations overseas.

Chancellor George Osborne promised to cut back this levy over the coming years in his Summer Budget in 2015. That change was expected to reduce some of the pressure on HSBC, but it was not the only factor being considered by bosses, as shown by the lengthy investigation of the domicile since that tax change was announced.

Insiders say a decision is “imminent” but that no decision has been made either way by the board.
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“Rumours abound that Stuart Gulliver and Douglas Flint of HSBC will tell the market this week about the bank’s future domicile,” said market commentator David Buik from Panmure Gordon.

“It is thought that the board may have decided to remain in situ, now that the government has sorted the bank levy situation out to a more agreeable level.”

An HSBC spokesman said: “we will provide an update by our full year results”.

The bank is already carving the UK retail banking unit into a ring-fenced entity headquartered in Birmingham to meet new British rules. Earlier plans had indicated that unit would be re-branded and could potentially be sold off if the global bank HQ left the UK, but the scheme is currently on the back-burner as the chance of moving domicile appears to recede.