London Loses as Banks Book Trades Overseas

[dkf]

Banks in Europe are exploring ways to cut costs by routing more of their trades and other business through overseas subsidiaries, a plan that may shift tax revenue away from London and loosen European regulators’ influence over the lenders.

Nomura Holdings Inc., HSBC Holdings Plc (HSBA) and UBS AG (UBSN) are among lenders preparing plans to book as much business as possible through legal entities in jurisdictions where tax rates are lower and rules on capital and liquidity are less onerous, the banks and lawyers and accountants working with them say.

“Every bank is trying to work out the best way to be structured under the new rules,” Chris Matten, a partner at PricewaterhouseCoopers LLP in Singapore, said in a telephone interview. “It’s not just a question of what activities banks are in. It’s about which entities they put that business through and in which jurisdictions.”

Banks could record as much as 30 percent of the value of their trades through Hong Kong, Singapore and other jurisdictions instead of hubs such as London and New York without running into trouble with regulators, Matten said. Such a move would hurt traditional hubs such as London because assets are treated for tax and regulatory purposes in the country where they are booked. It would also allow banks to sidestep the U.K. bank levy, introduced last year to raise 2.5 billion pounds ($4.1 billion) from lenders operating in Britain, as well as any financial transaction tax imposed by the European Union.

http://www.bloomberg.com/news/2011-08-31/london-the-biggest-loser-as-banks-look-to-book-trades-overseas.html

[SoCalDem]

1. In our glabalized world, we need standardized regs for everyone, everywhere

computers make it too easy to shift stuff around and to hide things

[leveymg]

2. Capital flight - just another step in the balance of payments crisis Krugman described in '97

It's happening here, too. Yet, Obama keeps the stooges like Geithner and Bernanke who played major roles in creating this crisis at their desks, while ignoring Krugman and Steiglitz.

We're completely screwed from the top down.