HSBC’s move from Canary Wharf to St Paul’s is a big win for the City and hybrid working

Published

2 years ago

June 26, 2023

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HSBC is set to leave its home of 20 years at 8 Canada Square in Canary Wharf, and relocate to a site near St Paul’s Cathedral previously occupied by BT.

The move, first reported by The Times, is hugely significant in what it says about demand for office space – and not just in London.

HSBC’s existing headquarters in London, to which it moved in 2002, currently houses up to 8,000 employees at peak hours. The new development, Panorama St Paul’s, is roughly half the size.

That reflects the fact that HSBC does not expect as many of its employees to be working in its head office at the same time in future.

It is a clear indicator from one of the biggest employers in the UK financial services sector that hybrid working, where employees work from home for a certain number of days a week and in the office for others, is here to stay.

At odds with others

The decision also puts HSBC at odds with some of the big Wall Street banks that dominate the investment banking landscape. The likes of JPMorgan and Goldman Sachs have been strident in their calls for employees to return to the office in the post-pandemic world.

By contrast, other employers in the Square Mile and Canary Wharf have taken a more flexible approach, with the likes of Lloyds Banking Group telling staff they expect them back in the office for at least two days a week in April this year.

The insurers Aviva and Axa, the asset managers BlackRock and abrdn, and accounting and business services groups such as Deloitte, PwC and EY are all among those who have avoided ordering staff to return to the office five days a week.

Implications to commercial property and beyond

That approach – and it very much looks to be the dominant one – will have massive implications for the commercial property sector.

It potentially leaves office owners with a surplus of space – even though recent business surveys by the likes of the property services group Savills suggest that demand for office space in central London is currently running at 10% ahead of its 10-year long-term average.

With the City and West End still pretty quiet on Mondays and Fridays – albeit not as quiet as they were during the lockdown period – it will also have implications for shops, bars and restaurants.

There are also implications for the owners of Canary Wharf itself.

The development, one of the most stunning urban regeneration projects achieved anywhere in the world during the last three decades, has been seeking to pivot away from financial services, the sector with which it is most strongly associated, into fields such as life sciences and the creative industries.

It has also begun offering residential space for the first time.

All of that was happening anyway. But the company – jointly owned by the Qatari government and the Canadian investment giant Brookfield – could still have done without HSBC moving on.

Another major Canary Wharf tenant, Credit Suisse, was also looking to sub-let some of its office space even before its rescue in March by local rival UBS.

Canary Wharf’s credit rating was downgraded at the end of last month by Moody’s.

A run of wins for the City

By contrast, the City of London Corporation – which has slugged it out for decades with Canary Wharf for office tenants – will be cock-a-hoop at luring HSBC back to the Square Mile, particularly as the news comes weeks after Clifford Chance, one of the five “magic circle” law firms, announced it would be moving back to the City from the Wharf when its lease there expires in 2028.

Luring HSBC to its new development – the bank told employees today the site was its “preferred option” – will also be a coup for Orion Capital Partners, the private equity firm, which acquired BT’s old head office at 81 Newgate Street in 2019 and which has been rebuilding it since the latter moved east to Aldgate in 2021.

HSBC, whose lease on the tower expires in 2027, also reportedly considered Evargo Tower, a site being developed to the rear of Fleet Street’s River Court, the 1932 Art Deco building previously occupied by Goldman Sachs and before that, Express Newspapers, whose journalists nicknamed it the “Black Lubyanka”.

Also considered, apparently, was 175 Bishopsgate, the vast building near Liverpool Street station previously occupied by the European Bank of Reconstruction and Development (EBRD).

The opulence of that building, replete with its marble walls, led the EBRD to be nicknamed “the Glistening Bank” – a pun on the old “Listening Bank” slogan of Midland Bank, which ironically was later bought by HSBC.

To add to the irony, the EBRD has since moved to Canary Wharf.

Moving from a symbolic home

HSBC’s existing home has been symbolic to the bank for many years.

Designed by the award-winning architect Sir Norman Foster, it brought together employees from around 20 HSBC and Midland Bank sites dotted across the City of London, including the striking blue glass building at 10 Lower Thames Street and the neighbouring (and less glamorous) St Magnus House; the now-demolished Mariner House on Pepys Street near Tower Hill; Fountain House on Fenchurch Street; Watling Court on the corner of Cannon Street and Bow Lane and, most famous of all, the beautiful old Midland Bank Group headquarters at 27 Poultry, which is now a hotel and member’s club christened – in a nod to its architect Sir Edwin Lutyens – The Ned.

To that extent, the now 45-storey building was a big commitment on HSBC’s part, following its acquisition of Midland in 1992.

At its completion it was the second-biggest building in Europe – after Canary Wharf’s flagship first tower at nearby 1 Canada Square – and has continued to break records since.

When HSBC sold it in 2007, to the Spanish company Metrovacesa, it was the first building in the UK to change hands for more than £1bn.

The buyer ran into difficulty during the financial crisis and, in December 2008, HSBC bought it back – making a reported £250m profit on the original deal.

The following year, HSBC sold the building on to South Korea’s national pension service, again at a profit. The tower has been owned since 2014 by the Qatar Investment Authority.

Since then, it has also been at the heart of the perpetual debate at HSBC over whether or not to retain its global headquarters in the UK or move to Hong Kong, something it reviews on a triennial basis.

There was once a time when this seemed almost inevitable and that day may still come.

For now, though, the only move on the cards appears to be four-and-a-half miles west from Canary Wharf.

Business

Tariffs hit US economy forecast but the Fed unmoved by latest Trump threats with no change to interest rates

Published

11 hours ago

June 18, 2025

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Tariffs hit US economy forecast but the Fed unmoved by latest Trump threats with no change to interest rates

The US central bank has made no change to interest rates and warned the world’s biggest economy will see less growth and higher inflation due to tariffs.

The Federal Reserve, known as the Fed, held rates despite President Donald Trump calling its chair, Jerome Powell, a “stupid person” on Wednesday.

“Maybe I should go to the Fed. Am I allowed to appoint myself at the Fed? I’d do a much better job than these people,” Mr Trump said.

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Despite appointing Mr Powell himself in 2017, Mr Trump has expressed anger towards the Fed chair at multiple points in the past for not bringing down borrowing costs through interest rate cuts.

In his own address to reporters, Mr Powell declined to hit back.

The tariff effect

But Mr Trump’s signature economic policy of tariffs – taxes on imports – was again forecast to cause higher inflation and lower economic growth in the US.

The Fed’s predictions for inflation were upgraded to 3.1% for 2025 from 2.5% in December, while the outlook for US economic growth was downgraded to 1.4% from 2.1% in December.

The effect of those extra taxes on imports will take time to work its way through the system and show up in prices on shelves, the Fed chair said.

An uncertain outlook

While the level of uncertainty peaked in April, when Mr Trump announced many of his tariffs, and has since fallen, it remains elevated, Mr Powell said.

The exact impact of the levies is unclear and depends on the levels they reach, he added.

Many of the country-specific tariffs have been paused for 90 days, which is currently due to end on 8 July.

Despite this, the economy is in a “solid position”, Mr Powell said.

Interest rates were kept at 4.25%-4.5%. Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.

A slowdown in the US economy can have an impact on the UK as the US is its largest trading partner.

On Thursday, it’s the turn of the UK central bank, the Bank of England, to make its latest interest rate determination, with no change also expected.

Business

Santander approaches TSB-owner about high street banking merger

Published

23 hours ago

June 18, 2025

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Santander approaches TSB-owner about high street banking merger

Santander has approached its fellow Spanish banking group Sabadell about a takeover of TSB, its British high street bank.

Sky News has learnt that Santander is among the parties which have expressed an interest in a potential deal, months after its boss denied that it was seeking to offload the UK’s fifth-largest retail bank.

City sources said on Wednesday that Santander had not tabled a formal offer for TSB, and was not certain to do so.

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However, the fact that it has contacted Sabadell about a possible transaction involving TSB suggests that Ana Botin, the Santander chair, may be open again to expanding its presence in Britain’s high street banking market.

The extent of the overlap between the two companies’ UK branch networks was unclear on Wednesday morning.

Santander, which like other banks has been engaged in an extensive branch closure programme for some time, now has roughly 350 UK branches, while TSB operates roughly half that number.

The value that TSB, which was acquired by Sabadell in 2015 from Lloyds Banking Group, might attract in any takeover is also unclear.

Sabadell is in the middle of attempting to thwart a hostile takeover by rival Spanish bank BBVA – a deal revealed by Sky News last year – with a disposal of TSB said to be on the cards regardless of whether or not that bid is successful.

Ms Botin insisted that the UK remains a core market for Santander in the wake of speculation that she might sanction a sale of the business.

The company recently confirmed a Sky News report that Sir Tom Scholar, the former top Treasury official sacked by Liz Truss during her brief premiership, was joining the bank’s UK arm as its next chairman.

NatWest Group, which recently returned to full private ownership, was reported to have submitted an offer worth about £11bn for Santander UK.

No discussions are ongoing about such a deal.

NatWest, Barclays and HSBC have also been touted as potential suitors for TSB, although at least two of those three banks are thought to have little interest in bidding.

TSB was effectively created from the ashes of the 2008 financial crisis, when a vehicle set up to acquire assets from distressed banking groups lost out in an auction to a bid from the Co-operative Bank.

That deal fell through when it emerged that the Co-operative Bank itself was in a perilous financial state.

Sabadell explored a sale of TSB about five years ago, but opted to retain the business.

Goldman Sachs is thought to be advising Sabadell on the prospective sale of TSB.

Responding to a report in the Financial Times on Sunday that TSB had been put up for sale, Banco Sabadell said: “Banco Sabadell confirms that it has received preliminary non-binding expressions of interest for the acquisition of the entire share capital of TSB Banking Group plc.

“Banco Sabadell will assess any potential binding offer it may receive.”

Santander declined to comment.

The TSB process emerged just hours after Sky News had revealed that Metro Bank, the high street lender, had been approached by Pollen Street Capital, the private equity firm, about a possible takeover.

The absence of a statement from either party implies that the approach was rejected and that Pollen Street has abandoned its interest, at least temporarily.

Business

Inflation slows to 3.4% but no Bank of England rate cut expected

Published

23 hours ago

June 18, 2025

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Inflation slows to 3.4% but no Bank of England rate cut expected

Inflation eased to an annual rate of 3.4% in May, according to official figures released this morning, but the Bank of England is widely expected to leave interest rates on hold despite that.

The Office for National Statistics (ONS) reported the consumer prices index measure eased from 3.5% the previous month.

It said that despite upwards pressure on prices from food and clothing, the decline was driven by falls in airfare prices following Easter.

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The headline figure also reflected a small downwards correction to ONS inflation data ahead of April related to vehicle excise duty calculations.

ONS acting chief economist Richard Heys said: “A variety of counteracting price movements meant inflation was little changed in May.

FOOD INFLATION AT 15-MONTH HIGH

James Sillars

Business and economics reporter

@SkyNewsBiz

Today’s headline inflation number suggests a flat picture for price growth overall.

But there is one stat that households will already be familiar with after a visit to the supermarket.

A jump in some food prices has been noticeable, with the ONS flagging a leap in its food and non-alcoholic drinks measure of inflation to a 15-month high.

Why the rise? Chocolate has spiked significantly this year due to a cocoa shortage blamed on poor harvests. Meat, particularly beef, has shot up on high global demand and rising costs.

The food and non-alcoholic drinks category has been on the rise for five months in a row. But the good news is that high rates of sales promotions by chains – discounts – are helping keep a lid on overall grocery bills.

“Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. Meanwhile, motor fuel costs also saw a drop.

“These were partially offset by rising food prices, particularly items such as chocolates and meat products. The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.”

Forecasts suggest that inflation will tick up over the second half of the year – with effects from Donald Trump’s trade war and rising commodity costs amid events in the Middle East among the concerns ahead for the Bank of England.

It has adopted a “careful” and “gradual” approach to interest rate cuts as a result.

That is despite weakening employment data, reported earlier this month, which showed a tick up in the official jobless rate and a 109,000 reduction in payrolled employment.

Other elements of the inflation data are also supportive of an argument for rate cuts.

Core CPI inflation – a measure that strips out volatile elements such as energy and food – eased from 3.8% in April to 3.5% while services inflation tumbled sharply to 4.7% from 5.4% the previous month.

Nevertheless, the Bank is widely expected to leave Bank rate on hold on Thursday following the June meeting of its rate-setting committee.

LSEG data showed after the inflation data that financial markets currently see two more interest rate cuts by the year’s end.

Risks to prices ahead will come from a sustained Israel-Iran war pushing up oil and gas prices but there have been different views among policymakers over whether the trade war will result in inflation or not.

As such, the minutes of the Bank’s meeting will be closely scrutinised for hints on whether rate cut caution is easing.