There are many reasons HSBC decided to keep its headquarters in London and most of them have to do with the evolving circumstances in China. Much has changed there since the bank announced it was reviewing whether to return to its roots in China and Hong Kong.
For a start, the regulatory risk has soared as local and foreign investors have lost their faith in the government and regulators’ ability to manage the markets and the currency. That matters to HSBC because if it had shifted back to Hong Kong, the People’s Bank of China would have been in effect its regulator and certainly its lender of last resort.
For the past two decades, as China’s manufacturing and its export machine prospered, it made sense for HSBC to think the mainland would contribute to an ever rising share of its profits. No bank was in a better position to mediate those flows and finance that trade.