HSBC Holdings, Europe's biggest bank, will review whether to move its headquarters out of Britain, potentially dealing a blow to a country trying to balance tighter regulation with the importance of the financial industry to its economy.
The announcement comes less than two weeks before UK elections on May 7.
It poses challenges for both the Conservatives seeking to return to government and their main rival, the Labour party.
Labour has said it will raise taxes on banks if it comes to power, while the Conservatives have pledged a referendum on Britain's membership of the European Union - something which HSBC Chairman Douglas Flint signalled could create economic uncertainty.
Shareholders have urged HSBC to consider moving back to its former Hong Kong home after a big jump in UK bank tax and other costs and regulations associated with being based in London.
"The board has therefore now asked management to commence work to look at where the best place is for HSBC to be headquartered in this new environment," Flint said today.
"The question is a complex one and it is too soon to say how long this will take or what the conclusion will be; but the work is underway," he added.
Reuters reported over the weekend that executives at HSBC and rival Standard Chartered were looking at quitting London for Asia. Investors told Reuters they wanted the banks to do a thorough analysis.
Shares in HSBC were higher today on the prospect of big savings, though analysts said the initial cost of moving could be between $1.5 billion and $2.5 billion.
HSBC last reviewed its domicile in 2010, and had previously said it would re-assess its position in 2015.
A spokeswoman for the Hong Kong Monetary Authority said it would follow up with HSBC "as appropriate" following news of its review. Britain's Prudential Regulation Authority and Financial Conduct Authority declined to comment.
HSBC began life in Hong Kong 150 years ago, with roots as a financier of trade between Europe and Asia.
It issues most of the territory's bank notes and has made $24 billion in profits there over the last three years, compared with a $4 billion loss in Britain over the same period.
It moved from Hong Kong to London in 1993 when it bought Midland Bank, and Hong Kong would be one of the few places that could handle its $2.6 trillion balance sheet.
Flint told shareholders at the bank's annual meeting today that HSBC needs to position itself in the best way to support the markets and customers critical to its success, according to pre-released comments.
HSBC also needs to take into account the requirement of UK regulators for it to separate its British retail business from the rest of the group by 2019, Flint said.
Some investors said that could be more significant than the bank levy in persuading it to move. HSBC is expected to pay $1.5 billion under the UK bank levy this year, or about 7% of expected profits. That charge is up from $1.1 billion last year and almost double a year ago.
Meanwhile, Standard Chartered said it was "listening very carefully" to shareholders on whether the Asia-focused bank should consider moving its headquarters out of Britain following the recent rise in UK bank tax.
"We continue to keep our UK domicile under review. Although we have no current plans to move our domicile, we are listening very carefully to our shareholders' views on this issue following the latest increase in the levy, the likelihood of any future increases, and its impact on the group's costs," a spokesman for Standard Chartered said.