Bank warns over ‘avalanche’ of rules in sector

Peter Sands said these trends had increased the argument for the bank to move its headquarters away from London, an issue which is constantly under assessment.

“We get asked about our intentions on domicile in almost every single investor meeting, including in those with our UK investors,” Mr Sands said.

Forty per cent of its investors are based in Britain.

“We don’t have plans to leave, our preference remains to stay here in UK,” he said, but added: “The strength of argument to leave has grown.”

Mr Sands, who was being quizzed by politicians on reforms proposed by the Independent Commission on Banking (ICB), said his biggest concern is the plan to force banks to hold debt that can absorb losses for all of its assets.

Mr Sands said he supported potentially making bondholders take losses if a bank fails, but the ICB’s proposal was “flawed in maths and logic” and Britain should wait for international rules on bail-in debt to be introduced rather than “front-run” them.

Rival HSBC has estimated that the ICB’s bail-in debt proposal could cost it more than $2.1bn a year.

The ICB said its package of reforms would cost the industry up to £7bn, which Mr Sands said was likely to be an underestimate.

In October, a government adviser said there was “a low probability” of banks quitting the UK over a planned overhaul of the industry.

Sir John Vickers, chairman of the ICB, told a committee of MPs that none of the country’s biggest lenders had threatened to move abroad if recommendations came into force.

In October, the commission unveiled a raft of proposals including ring-fencing banks’ high street divisions to protect them from riskier investment arms and setting aside more cash to cushion the blow of potential losses or future financial crises.

It had been feared the estimated cost of the reform, between £4bn and £7bn, would lead to banks moving headquarters overseas in protest at the moves planned for 2019. Sir John told the Treasury Select Committee banking customers, including small businesses, would only see costs increase by 0.1 per cent.