HSBC, Britain’s biggest bank, said that it would be run from Hong Kong, a sign that the world’s economic centre of gravity has shifted decisively east.

The announcement follows a decision by world leaders on Thursday that the Group of 20 developed and developing nations will become the leading economic forum, replacing the Western-dominated G8 and spreading greater influence to emerging nations such as China and India.

Michael Geoghegan, the group chief executive of HSBC, who will relocate to Hong Kong in February, said: “We can’t get away from the fact that the East is growing at a faster rate than the UK, the US or Europe. In my time it will take over from the West as the most powerful part of the world economy.”

Stephen Green, the chairman of the bank, added: “We, the UK and Europe, have to face the implications of the rise of the East over the next 30 to 40 years. This is the fact of the first half of this century.”

He added that the decision to move HSBC’s chief executive function to Hong Kong had been approved by the Financial Services Authority (FSA).

Mr Green and Douglas Flint, the finance director, will remain in London and the bank emphasised that there were no plans to move its head office or tax domicile away from the UK. The move of the group chief executive function will affect only 15 people in the short term.

“The advantages of London are clear in terms of legal domicile,” Mr Green said. “I think it’s very unlikely we’ll ever move, although you can never say never — London’s lead is going to be challenged.”

HSBC reviews its domicile every three years. However, its move signals that much of its expansion will be focused on Asia rather than on the UK and the Continent. The shift will ring alarm bells about London’s status as one of the world’s leading financial centres.

Stuart Fraser, chairman of policy for the City of London Corporation, said: “This does underline the competitive nature of the global economy and the fact we cannot take for granted London’s leading position.

“We must bear that in mind when we are considering changes to regulation in the City. We shouldn’t make the UK and Europe a less attractive place than Asia when it comes to tax and regulation.”

London’s banks and bankers have faced a significant backlash since the financial crisis hit last year and the G20 has faced calls this week to cap bankers’ bonuses.

Lord Turner of Ecchinswell, the chairman of the FSA, has said controversially that London’s status as a leading financial services capital should not be the key consideration when deciding whether to change UK rules on taxes and bonuses.

Higher-rate UK taxpayers — such as Mr Geoghegan, who is paid up to £3 million a year — will face a 10 per cent rise in tax next year when Britain implements a 50 per cent tax for top earners. Income tax in Hong Kong is 17 per cent. Mr Fraser said that a move east made sense for HSBC, which was formed in 1865 to finance trade between China and Europe and opened a branch in Shanghai that year.

“They are the Hong Kong and Shanghai Banking Corporation, after all,” he said. “This fits their profile.”

The shift east was welcomed by Knight Vinke, the activist investor that took a small stake in HSBC three years ago and has called for the bank to focus on its Asian business.

“This is something we have been asking for since we first approached HSBC publicly in 2007,” Eric Knight, a co-founder of Knight Vinke, said.

Knight Vinke also approved of a parallel move to shift responsibility for strategy from Mr Green to Mr Geoghegan.

“We have also been seeking a separation between the person responsible for setting strategy and the person responsible for challenging that strategy,” the activist fund said.

Mr Geoghegan said that HSBC intended to steal a march on some of its crisis-hit rivals by challenging them in Asia.

G20’s new global compact, page 55

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