HSBCAs one of the UK’s ‘big four’ banks, HSBC continues to benefit from a promise that taxpayers will never let it fail, because it would be too damaging to the UK economy.
The money taxpayers have loaned to these banks comes at a very low interest-rate. And this interest-rate subsidy is disproportionately largest for the biggest banks, such as HSBC.
So whilst it did not need a direct government bail-out following the financial crisis in 2008, HSBC- and all other high street banks- owe their survival to public financing.
This also means that bonuses paid to senior bank staff and dividends to institutional investors are, at least partly, paid for by the taxpayer. Stuart Gulliver, the new chief executive of HSBC, recently received a bonus of around £9million - which could pay for the annual salary of over 400 nurses.
Want more evidence that we’re not ‘all in this together’? HSBC is one of the big banks that will avoid paying billions of pounds worth of tax on future profits by offsetting losses it suffered during the financial crisis against its tax bills.
Then there’s HSBC’s profiteering from the NHS. A report by the Times in 2008, found that HSBC made almost £100million from managing NHS hospitals where contractors ‘charge taxpayers inflated bills for simple tasks, such as £210 to fit an electrical socket’.
Moreover, according to a recent BBC investigation, HSBC used a legal tax loophole to divert millions of pounds of NHS money into an offshore ‘tax haven’. In 2010 a company set up by HSBC made more than £38m profit from its 33 PFI hospital-building schemes and paid £100,000 in UK tax - less than half of 1% of the profits. Describing such practices as ‘scandalous’, former Oxford MP Dr Evan Harris called for new rules to stop NHS money being sent to tax havens.
Earlier this year HSBC told its shareholders about plans to quit London for Hong Kong. We doubt anyone will be bidding them a tearful goodbye.