"We are willing to do it but only where we believe there is a potentially strong case. We believe [Barclays] has [broken the code of conduct] and we don't think that that is acceptable. All the banks have signed a code of conduct, they have said that they wouldn't be engaging in aggressive, artificial tax-avoidance arrangements of the sort that we have seen, that's been disclosed to the HMRC, and in those circumstances, when we were aware of what this bank was doing, it is right that we took strong action."
For the past few years, experts have warned that a crackdown on tax loopholes, the continually changing regulatory environment and increased costs from regulatory changes – especially after increased capital requirements under Basel III and Solvency II – has meant that some financials have already made the bid to move overseas.
On Sunday, the UK's largest insurer Prudential revealed it is debating whether to relocate to Hong Kong, to avoid an "adverse outcome" from Europe's proposed Solvency II capital regime.
Analysts say they are not surprised, considering the firm would have to raise "billions" to comply with Solvency II.
Michael Wainwright, partner at international law firm Eversheds, says:
The news from Prudential is a sign of the times. Eversheds also recently unveiled a Regulation in the City report, which revealed a notable degree of frustration about the UK regulatory regime.
Half of those surveyed were concerned that businesses will move to other financial centres to avoid regulatory pressures, with 44% thinking that businesses will relocate to Hong Kong and 37% to New York.
"These findings seem to be playing out in practice here. Equally, two thirds of businesses stated that uncertainty around legislation compliance has led to their organization delaying business activity. This suggests that in the longer term London may indeed be the loser, as international firms decide that the regulatory costs of being headquartered in London outweigh the other advantages of the location.”
“Asia is booming. Corporate governance and ongoing reporting requirements in the US, UK and through the EU are seemingly pushing companies to Asia for equity and convertible debt listings, namely Singapore and Hong Kong, as they are perceived to have less compliance costs and constraints.
"Another interesting point is seeing how various directives and regulatory changes will have a big impact on capital requirements and funding for banks. The UK, Europe and the US are going to be the most hit, in terms of capital required and liquidity maintained, so it’s no surprise that a number of banks or companies are paring back operations in the west and expanding in Asia, where it is perceived to be a more favourable tax, capital and liquidity environment.”