Standard Chartered chief executive Peter Sands said at its results recently that he was increasingly concerned about where to be domiciled: \”London is still the world\’s centre for international banking. It is our preferred solution to be here, unless we are hopelessly disadvantaged.\”
There\’s all sorts of reasons why the banks won\’t move, from opera and theatre through to simple inertia. But make it too bad for them and they will move….and that same inertia will make it very difficult indeed to get them back.
And what\’s the easiest part of the bank to move? The HQ, the domicile of the company. They might not do it for tax but they might for another reason:
Leading bankers are claiming to be so hamstrung by bonus restrictions that they are threatening to relocate overseas. Anger about the Financial Services Authority\’s (FSA) strict implementation of the G20 code on pay follows the Treasury\’s decision to impose a bank tax unilaterally, and has raised questions about whether the UK is the right place to be headquartered.
Bankers claim the FSA is the only regulator to be enforcing the bonus rules for domestic banks\’ international operations, making it difficult to compete in foreign territories. They also say the regulator\’s definition of who qualifies as having \”significant influence\” captures more than twice as many staff as in rival countries. \”Significant influence\” staff have to take proportionately less pay in cash and defer a larger element for three years.
And if the HQ goes then so does the corporation tax….and, BTW, it\’s illegal for us to either stop or try to charge any company on its way out if it\’s going to another EEA or EFTA country. Liechtenstein anyone?