HSBC – Britain’s local bank?

So what’s the upshot of yesterday’s Vickers review into banking? A research note issued today by UBS puts it bluntly: Lloyds to do better, Barclays to shrink and HSBC to quit Britain entirely. The UBS note, written by Alastair Ryan and John-Paul Crutchley, points out that HSBC took not a penny of bailout money. It was able to cushion its own fall – so why hang around and let British regulators hack off its investment banking division?

“HSBC required no state support during the recent crisis, either explicitly through capital or implicitly through liquidity or funding support,” says the note. “This is forgotten in official UK thinking about what happened and what to do about it. We believe the company’s confidence in the stability, predictability and proportionality of UK regulation and taxation has been fundamentally shaken in recent months.”

HSBC, it says, was already given a “shock” when George Osborne’s recent balance sheet levy taxed HSBC’s entire global balance sheet as a result of being headquartered in the UK.