After a major review which took a year, the conclusion of an investigation into whether HSBC should move its headquarters to Shanghai or stay put in London has ended – with the decision to stay put. Given the decision, there will undoubtedly be those who view the whole process as a farce.

However, there a couple of questions being asked in the wake of this decision. The first is whether the announcement by David Cameron over the weekend that the UK’s referendum on staying in the EU was deliberately planned to come after HSBC’s public declaration of their decision, in order not to spook the financial institution.

Did Banking Levy Changes Play a Part?

Perhaps a more salient question would be – did the HSBC review spook the UK government (either deliberately or inadvertently) into making changes to the UK banking levy? In last year’s Autumn statement, UK chancellor George Osborne announced that over the next six years the levy on banks would be reduced from 0.21% to 0.1%. Given that HSBC has been paying around £1 billion per year via this bank levy, such a significant reduction may have gone some way towards sweetening the deal for HSBC when it came to making a decision about staying or leaving.

The board of the bank is clearly aware of how its decision to stay looks in light of this planned reduction; Douglas Flint, chairman of HSBC, has made it clear that no direct pressure was put on the government over the issue; making a statement saying that;

‘We had no negotiation with the government. The government was well aware of our view, and indeed the view of many other people who commented upon it, but there was certainly no pressure put, or negotiation.’

London’s Financial Reputation

There may have not been direct pressure, but it’s fairly clear that there would have been at least some indirect pressure on the Treasury, given the monumental ramifications for the UK if HSBC, one of the world’s largest and most well known financial institutions, had decided to go ahead with a massive, full scale move away from London and to Hong Kong. London’s reputation as a global financial hub might well have taken a significant blow, and caused other big-name firms to question their own continued primary presence in the UK.

Not Such a Big Deal?

Yet is this really as big a deal as it has been made out to be in recent weeks and months? A recent article for City AM pointed out than in actuality, many major companies regularly consider the suitability of their HQ location. However, the same article, stressed how important the decision was for maintaining London’s reputation as a financial centre – actually, not just London, but the UK as a whole, with some of the world’s biggest financial institutions having hundreds or even thousands of employees in cities such as Birmingham or Belfast.

In the meantime, HSBC recently announced an unexpected loss for the fourth quarter of 2015, which the bank partially blamed on the slow-down being experienced by the Chinese economy. Could China’s economic slump also have played a part in HSBC’s decision (which its board came to unanimously) to remain in the UK? It’s certainly possible.

HSBC’s share price is at around 457 at the time of writing, more than 10% lower than the 520.40 it was at two months ago at the beginning of the year. It remains to be seen whether it will rebound or fall further.