Under-fire banking giant HSBC created a pre-election storm today when it announced that it would consider moving its headquarters out of the UK.

Chairman Douglas Flint told the group's annual general meeting that it was responding to "regulatory and structural reforms" in the industry in the wake of the financial crisis.

These include, in the UK, the need to separate its investment banking arm from the retail division serving ordinary customers and businesses.

The bank has also been hit by a UK bank levy, which last year cost it $1.1 billion, up $200 million in 2013.

HSBC's announcement sparked a claim that the "regulatory pendulum has swung too far" while Labour seized on remarks by Mr Flint on the uncertainty facing the bank over Britain's future in the European Union.

Meanwhile, Chancellor George Osborne said "anti-business" policies from Labour threatened to drive companies abroad.

The chairman disclosed the review at the company's AGM in London, where the board faced a bumpy ride from shareholders over the potential move as well as on a series of scandals that have dogged the bank.

One investor, Michael Mason-Mahon, said: "Which country are you likely to go to? How many countries have you not committed illegal and criminal behaviour in?"

Mr Flint said it was "essential that we position HSBC in the best way to support the markets and customer bases critical to our future success".

He added: "We are beginning to see the final shape of regulation and of structural reform, including the requirement to ringfence in the UK.

"As part of the broader strategic review taking place, the board has therefore now asked management to commence work to look at where the best place is for HSBC to be headquartered in this new environment.

"The question is a complex one and it is too soon to say how long this will take or what the conclusion will be, but the work is under way."

Mr Flint also cited a series of uncertainties - including one that "stands out", which is Britain's future in the EU. His remarks come at a time when the Conservatives are pledging an in-out referendum.

He said the bank's own research indicated that working towards reforms in Europe would be "far less risky than going it alone, given the importance of EU markets to British trade".

The review of where the bank has its headquarters comes as it has been under intense pressure over its Swiss private banking arm over claims that it helped thousands of account holders hide billions of their assets from tax authorities.

The scandal resulted in Mr Flint and chief executive Stuart Gulliver being ferociously grilled by MPs and apologising for "unacceptable" activities. It is under criminal investigation in a number of countries. Mr Flint acknowledged today that "the recent past has been very difficult for HSBC".

The bank has also been caught up in scandals including money laundering and foreign exchange rate-fixing, amid public anger over the behaviour of the wider sector.

Deputy Prime Minister Nick Clegg told BBC Radio 5 Live that he made no apology for moves to clamp down on excessive bonuses and "making sure the banks pay their fair share by paying much, much more tax through our banking levy".

Simon Walker, director-general of the Institute of Directors, said it had been "broadly supportive" of new regulation in the sector.

But he added: "There have been instances where the regulatory pendulum has swung too far and this, taken alongside the ever-increasing bank levy, has clearly given the board of HSBC reason to review whether the UK remains the most attractive and supportive business environment.

"This warning from one of the UK's biggest companies should force politicians to pay heed to the effects of both their policies and their rhetoric, and to take seriously the threat of a major withdrawal from the British economy."

Shadow business secretary Chuka Umunna said: "HSBC's statement today serves to illustrate how irresponsible it is to play fast and loose with the UK's membership of the EU."

Mr Osborne said: "We have to have properly regulated banks. But if we proceed in this country with an anti-business set of policies we are going to drive companies abroad, we are going to see jobs lost."

HSBC, which originated in Hong Kong, has been based in the UK since 1992 when it took over the UK's Midland Bank and shifted its headquarters to London. The global group employs 266,000 people, including 48,000 in London.

Last month it said it was to relocate the head office of its UK retail bank to Birmingham by 2019, in a move that will see 1,000 jobs transferred from London, as part of the "ringfencing" separating different parts of the business.

There was some scepticism over the idea that HSBC might leave the UK, with one shareholder at today's AGM saying the bank had threatened to do so before, though Mr Flint said: "I haven't threatened anything."

The chairman declined when asked to give a commitment that it would stay in the UK for three more years, saying there was still "work and analysis" to be done.

Meanwhile, deputy chairman Sir Simon Robertson said the board had "absolutely full confidence" in Mr Flint and Mr Gulliver amid calls for them to go in the wake of the succession of scandals the bank has faced.

He also backed the re-election of board member Rona Fairhead - who is also chair of the BBC Trust - after she was severely criticised by MP Margaret Hodge, chairman of the Public Accounts Committee, at a hearing in the wake of the Swiss scandal.

She will serve one last year on the board before stepping down, as Sir Simon said her "responsibilities as the chair of the BBC Trust will increase".

The bank survived a revolt over Mr Gulliver's £7.6 million pay package, with 24% voting against its remuneration report.

 

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