'We're looking' at headquarters issues, says Standard Chartered

By Steve Slater and Matt Scuffham LONDON (Reuters) - Asia-focused bank Standard Chartered said the location of its headquarters was under constant review and a sharp increase in a tax on banks in Britain meant it was watching the situation closely. "At the moment it's something we're watching, we're looking at, we're thinking about, but at this point in time there's no change in our position," Andy Halford, Standard Chartered's finance director, said. "Clearly the increase in the (bank levy) number this time is pretty significant," Halford told reporters on Tuesday. Halford was speaking after the bank reported a 22 percent drop in profits in the first quarter as losses from bad loans jumped 80 percent from a year ago and trading conditions remained challenging. Some shareholders have told Reuters they want Standard Chartered to follow its rival HSBC and formally review the location of its headquarters after a jump in the bank tax in Britain this year. The tax has increased eight times since being introduced in 2010 to ensure banks make a "fair contribution" after the financial crisis. HSBC's review of its domicile sparked a political row ahead of a national election in Britain on May 7, putting the spotlight on party policies on whether Britain will stay in Europe and how much banks should be taxed. Halford estimated Standard Chartered would pay about $540 million (353 million pounds) under the bank levy this year, which would represent about 11 percent of expected pretax profits and be up from $366 million in 2014. "The general reaction of shareholders is we're happy that you as a management team are giving this thought and we expect that with full detailed knowledge you will come to the best conclusions for the business," Halford said. He said there were a range of factors to consider as well as the bank levy, including the skill and availability of labour, other tax issues, regulatory issues and London's strength as a financial centre and its "neutrality" as a headquarters for a bank that operates across dozens of Asian countries. Singapore, the hub for most of Standard Chartered's businesses, would be the most likely destination if it chose to move, industry sources have said. The bank is trying to turn around its performance after two bad years and will get former JP Morgan investment bank boss Bill Winters as its new chief executive in June. Standard Chartered's loan impairments rose to $476 million from $265 million a year ago. Pretax profit fell to $1.5 billion in the quarter, down from $1.9 billion. The bank said it was on schedule to get its common equity Tier 1 capital ratio above 11 percent this year and would deliver cost savings of more than $400 million in 2015. Its core capital, a measure of financial strength, was 10.7 percent at the end of 2014, but it did not say what its core capital was at the end of March. The bank has said it will cut costs and shrink its loan book in an effort to deal with the market's concerns about its capital strength. It said it was well advanced with a plan to reduce its risk weighted assets by between $25 billion and $30 billion in the next two years. Shares in Standard Chartered were down 1 percent by 1020 GMT (1120 BST), in line with a decline in the European banking index <.SX7P>. (Editing by Kirstin Ridley and Jane Merriman)