HSBC prepared to move some staff from London to Paris, followed by UK Prime Minister Theresa May’s statement
HSBC Holdings plc (ADR) (NYSE:HSBC) Chief Executive Stuart Gulliver expressed the gradual move of some staff to Paris, following Brexit. While speaking at the World Economic Forum in Davos, Mr. Gulliver discussed UK Prime Minister Theresa May’s role towards the referendum, a day before the Prime Minister officially announced that Britain is moving out of the European single market.
HSBC has been one of the most vocal corporations on Brexit, stating that the outcome is not the most favorable to banks, but they are prepared. In the interview on Wednesday, Mr. Gulliver said that he plans to move the staff responsible for 20% of the trading revenue. He said, “Activities specifically covered by EU legislation will move, and looking at our own numbers, that’s about 20% of revenue.”
Previously, HSBC stated that more than 1,000 jobs would be required to move from London, which is the major hub for market access to whole Europe. The staff will start moving after two years when the process is completed. The shift of the staff will not take much time, as claimed by Mr. Gulliver. HSBC has all the licenses already placed for such a shift. The lender would only need to set up a subsidiary in France, which would take few months.
In a separate statement while speaking with Bloomberg, Mr. Gulliver expressed that the macro-economic conditions do not allow now to achieve Return on Equity (ROE) of 12%-13%. Therefore, the new targets are set to 10%, given the headwinds from low interest rates, Brexit move, and lack of growth in Europe.
HSBC stock has seen a significant gain in market value since the election day in November 2016. Banking sector has overall enjoyed the rally, but investors are still concerned about the continuation of the bull market. The stock trades higher in pre-market over Mr. Gulliver’s interview.