“Activities specifically covered by EU legislation will move, and looking at our own numbers, that’s about 20 percent of revenue,” Gulliver said in a Bloomberg Television interview at the World Economic Forum in Davos, Switzerland, with John Micklethwait. The bank confirmed that he was referring to the lender’s global banking and markets operations in the U.K. capital.
Gulliver, who runs one of the world’s most globalized banks, praised Prime Minister Theresa May’s handling of Brexit so far and also said he doesn’t expect a trade war to erupt between the U.S. and China under incoming U.S. President Donald Trump. Such an outcome could damage HSBC, given it makes most of its earnings in Asia. Earlier Tuesday in Davos, Chinese President Xi Jinping urged business and political elites to reject protectionism in his first public rebuttal of Trump’s rhetoric on trade.
A trade war “would clearly be negative for us,” Gulliver said. “We are the biggest trade-finance bank in the world.” [...]
Gulliver said HSBC will “proceed quite slowly” after May confirmed Tuesday that Britain will leave the European Union’s single market. He repeated his pre-Brexit estimate that 1,000 jobs at the bank’s offices in London are involved with products covered by EU legislation, which probably need to move to France when the U.K. leaves the single market.
“Some of our fellow bankers have to make decisions quickly” if they don’t have continental subsidiaries like CCF, the French commercial bank HSBC bought in the previous decade, he said.
Gulliver’s estimate of a 20 percent Brexit revenue exodus from London matches that of Credit Suisse Group AG Chief Executive Officer Tidjane Thiam. In September, Thiam said as much as one-fifth of the volume in the bank’s London operations could be affected by the loss of EU passporting rights. [...]
“Irrespective of Brexit, London will remain a global financial center, and the revenue impact of Brexit on financial services will be made good in two to three years’ time,” Gulliver said. Although some derivatives operations may need to move, other business areas such as bond and equity trading and underwriting will remain in the U.K. capital, he said.
Gulliver said HSBC will especially monitor developments on work permits, given his bank’s U.K. operations employ about 2,100 EU citizens in the U.K. and 1,300 more staff from outside the bloc.
Tweaking Rules
The CEO said his “operating assumption” was for the U.S. and China to “tweak” rules on country of origin and dumping goods below fair market value, which would be manageable for HSBC. He said tougher trade barriers could balkanize global commerce, which would benefit China’s relative strength in the Asia-Pacific region. [...]
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