HSBC picks Brum for its ring-fenced headquarters

HSBC has moved a step nearer to establishing its UK ring-fenced business after being granted a banking licence by the regulators, the Press Association understands.

Sources at the bank said the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) gave HSBC UK the green light on Monday, putting the lender on track to be ready well ahead of the ring-fencing deadline in 2019.

Europe’s biggest bank is shifting its consumer, commercial and wealth management businesses into HSBC UK to obey ring-fencing rules designed to shield households and firms in the event of another banking crisis.

The UK Government measures demand all British banks with more than £25bn of UK deposits section off their retail operations from their riskier investment banks by 2019.

They aim to avoid a repeat of the credit crunch of 2008 when ordinary people’s deposits were put at risk and the Government was forced to bail out lenders left stricken by the collapse of the sub-prime mortgage market.

As part of the overhaul, HSBC is moving more than 1,000 head office roles from London to Birmingham, where the headquarters of the ring-fenced bank will be based from January 2018.

The lender has reported that two-thirds of the positions have now been filled or are in the final stages of the recruitment process.

Up to 2,500 staff will work in the 210,000 sq ft, 10-storey office in Centenary Square as part of a £200m investment in the West Midlands city by HSBC.

The ring-fenced bank is being headed up by former London Stock Exchange boss Clara Furse, who will chair the business, while banking veteran Ian Stuart has been appointed chief executive of HSBC UK.

Mr Stuart said last month that HSBC may keep more jobs in Britain depending on whether the Government pursues a hard or soft Brexit.

HSBC is one of a number of banks considering relocating jobs to the Continent after the Brexit vote, having said that 1,000 jobs may have to move from London to Paris over the next two years, depending on the outcome of negotiations.

The bank reported in May that first-quarter profits had slumped 19% to US $5bn (£3.8bn), reflecting a change in the accounting of the fair value of its debt.

HSBC, the FCA and the PRA declined to comment.