City turns on Mervyn King as HSBC threatens to leave
David Cairns: City bosses slam ‘old man’ King and HSBC shareholders claim it plans to quit London
Bank of England governor Mervyn King has provoked a furious response from the City after saying yesterday that many banks' only concern was to "maximise profits next week".
Warning that lessons of the 2008 crash have not been learned and the banks could now face a second collapse, King told the Daily Telegraph they are still obsessed with bonuses and said that "imbalances" in the sector "are beginning to grow again".
He added that he intends to find ways of clamping down on banks who seek to make money out of "gullible or unsuspecting customers". King's remarks were quickly backed up by the deputy PM, Nick Clegg, who said he agreed "the job of making our banks safe and responsible is not yet complete".
For the UK financial sector, yesterday must have been a little like being bitten in the seat of the trousers by an old family dog one had believed to be toothless. While King has said recently he wants to separate the banks' investment and retail operations, yesterday's remarks went far further than he has gone before.
Retribution has been swift: King has been briefed against, with an unnamed "senior banking source" telling the Sunday Telegraph that he is "an embittered old man with no appreciation of reality".
With an undertone of Mafia-style threat, the source added: "Mervyn is putting himself in a dangerous position. It is clear he doesn't like bankers and that is not the correct position for a man in his position.
"It's an extraordinary interview. People are concerned that someone in his position would say such things, more in sorrow than anything."
More officially, the British Bankers' Association said the governor's remarks did not take account of the "extensive reforms" of the sector which have already been made.
Most dramatic of all was the extraordinary coincidence that "senior shareholders" in HSBC chose today to tell the Sunday Telegraph that Britain's largest bank is "more likely than not" to move its headquarters out of the UK.
The bank revealed last week that its operating expenses rose last year by 9.6 per cent to $37.7bn. Finance director Iain Mackay blamed new banking regulations and the bonus tax in Britain and France for the increase.
Haven't we been here before? Yes: after then-chancellor Alastair Darling introduced his bonus tax in 2009 we were warned of a biblical exodus of financial services which would leave the City a blasted wasteland where the horsemen of the apocalypse road four-abreast down Threadneedle Street.
In reality, the banks stayed. It was all a little like the time Paul Daniels threatened to leave Britain if Labour got back into power. The day after Tony Blair's 1997 landslide, one national newspaper optimistically sent him a removals van – he didn't use it.
Today a spokesman for HSBC told Reuters: "No decision whatsoever has been made.
"London is ideally positioned as an international financial centre and we have been clear that it is our preference to remain headquartered here." ·
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