HSBC to Hong Kong - the right place at the right time?
As some of you may be aware, there has been recent talk of HSBC upping sticks and moving its headquarters to Hong Kong. This has prompted much speculation and commentary in the media. In this piece we look at how you might use this news story in an interview setting - if prompted to to talk about a recent news story that has interested you. This is a technique used in some interviews for financial roles, where evidence for wider economic knowledge is sought by the interviewer. It's a technique I've used myself when interviewing people for roles on trading floors in the City!
So perhaps the first thing to note, is that if HSBC does move to Hong Kong, its balance sheet will dwarf Hong Kong’s GDP by 10 times.
So why would Hong Kong want HSBC on its patch? Certainly the regulatory authorities in Hong Kong are warm to the idea, but what other factors might be at play, and how might it affect the banking landscape that you may graduate into?
- Is HSBC following the money? Three-quarters of capital market executives feel that the Asia Pacific region will have a global financial hub within 5 years AND within 15 years two-thirds of the world’s middle class will live in Asia, while Europe and the US’ share will drop to less than 25% in the same period.
- HSBC has a history of reviewing its geographic location every 3 years following its move to Europe in the early 90s. Perhaps a nomadic economic model where the bank moves to the most beneficial environment is one that other institutions may envy.
- Hong Kong would not be alone in having a financial sector that dwarfs the rest of its economy; Iceland has recently hosted a financial sector with assets larger than the territory it operates in. The collapse resulted in some years of capital controls, but ultimately a strong recovery as the government resolved not to socialise private banking losses. Could Hong Kong, and consequently China follow this model if the bank runs into difficulties? Would they want to?
- Might the biggest issues come from a lower credit rating from not having the Bank of England as a lender of last resort, and even employee visas and capital controls?
…some food for thought as more expertise & business positioning moves globally eastwards.
A guest post from our Careers in the City group
Image courtesy http://www.imagesource.com/stock-image/Skyscrapers-in-hong-kong-IS098R0H3.html