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8414741
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# UK banks could lose business to rivals within months, warns HSBC's Douglas
Flint
## Uncertainty over future controls on the British banking industry could see
them lose business to foreign rivals within months, according to Douglas
Flint, chairman of HSBC.
![UK banks could lose business to rivals within months, warns HSBC's Douglas
Flint][1]
UK banks could lose business to rivals within months, warns HSBC's Douglas
Flint Photo: GETTY
[![Harry Wilson][2]][3]
By [Harry Wilson][4], Banking Correspondent 5:45AM BST 30 Mar 2011
[Comments][5]
Addressing an audience of top City analysts and institutions, Mr Flint offered
one of the bluntest assessments yet of London's future as a financial centre
less than two weeks before the Government-appointed Independent Commission on
Banking is due to deliver its preliminary report.
Mr Flint said HSBC worried "a lot" about the new regulations the Government
could bring in and said that unless the situation was clarified within months
UK-based banks would begin to lose business.
"I talk to institutions and customers. The simple point they have is one of
'We have to run our business and if in five or six months' time it's not clear
what the structure of UK-based banks will be when we've got to do 10-year
swaps, or 15-year credit arrangements, or set in place a framework that you
want to last for a long time, it's going to be more and more likely we are
going to move to a universal bank that can say in 10 years' time it will still
be doing swaps out of this particular entity'," said Mr Flint.
HSBC's commitment to the UK has increasingly been in question in the past
month after Mr Flint and chief executive Stuart Gulliver were forced to put
out a statement denying the bank was likely to move its headquarters to Hong
Kong.
Fears of an exodus of major banks from the UK in the wake of new regulation
were stoked further yesterday with the publication of a UBS report suggesting
Barclays should look at redomicile.
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"Concern over 'too big to fail' dominates the UK regulatory agenda but rather
than Barclays being too big, it may well be that the UK is too small," said
UBS.
UBS argues that while US peers such as JP Morgan Chase that are in a similar
financial position have been allowed to begin making full dividend payments,
Barclays' shareholders are suffering because of the UK authorities' reluctance
to allow them to return to their pre-crisis level of payouts.
"While staff compensation is driven by international comparisons, rewards to
shareholders look increasingly determined by local regulators. If this
difference becomes permanent, we think Barclays has little option but to
consider shifting domicile," said UBS.
The Independent Commission on Banking is due to publish an options paper next
month setting out its thinking on what needs to be done to make the UK's
banking system safer and more competitive. Reforms under consideration include
forcing banks to separate their so-called "casino" investment banking
operations that have been blamed for causing problems at banks such as Royal
Bank of Scotland.
Mr Flint warned any such move might lead banks to "take decisions to protect
their economic activities".
Speaking at the same event, Stephen Hester, chief executive of RBS, said that
regulatory fears were holding back the bank's performance.
"Economic and market environment remains uncertain and may take time to
clarify," said Mr Hester.
George Osborne, presenting the Budget last week, said he was committed to
ensuring the UK remained a world leader in financial services. However, the
Chancellor's increase to the banking levy has only upset the industry.
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