One of the world's biggest banks still doesn't know where it should be based

A man looks at a map of the city of Shanghai at a metro station in Jing'an district, Shanghai June 7, 2012.

When a bank the size of HSBC, which has a $2.6 trillion (£1.7 trillion) balance sheet, looks at moving its headquarters, it creates waves.

The bank said on Monday that its review into where its headquarters should be based is taking longer than it thought, and probably won't make a decision this year.

Here's what HSBC said (emphasis ours):

Whilst there is a considerable amount of work still to do, a significant amount of work has been carried out, supported by a number of external advisers. In addition, as the review has progressed, further information has been requested by the Board. Whilst the target for completion of the review was initially set as by the end of 2015, this is a self-imposed deadline that can be moved should the Board require further work to be performed.

HSBC's options are limited by its size. It's the world's fourth largest bank by assets.

Peter Hahn of Cass Business School said on the BBC's Today program that HSBC's balance sheet "becomes outsized for most countries." He added that the bank would want to base its international headquarters in either the US or China because its balance sheet wouldn't look bigger than that of either country's economy.

Neither country is particularly ideal for HSBC. While the US might be a good fit in terms of having the right size economy and financial sector, there is history between the bank and the US regulators, which fined the bank $1.9 billion (£1.3 billion) for breaching money-laundering rules in 2012.

Hong Kong could still be in the running but the Chinese government's heavy-handed response to stock market crashes earlier this year may have made it less attractive.

So the review continues, which suits HSBC quite well.

It's a powerful lobbying technique when having talks with the UK Treasury about policies for the banking industry. HSBC brings in hundreds of millions of pounds in tax revenue, and also adds a prestige factor to London's standing as a global financial centre.

There have been a few results already, with UK Chancellor George Osborne making tweaks to the bank levy and senior managers' regime, a set of rules that hands more personal responsibility to senior execs, since the review started.

The domicile review isn't not the only factor in those decisions but for HSBC it's a good way to get your voice heard so there's no need to rush the decision.

About NAVJEET

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.