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* HSBC board unanimous on keeping HQ in London
* UK climbdown on bank tax seen helping London win through
* China influence, market turmoil seen weighing against HK
* 'Brexit' could see 1000 jobs move to Paris- CEO
* GRAPHIC: HSBC's regional profits http://tmsnrt.rs/2141LuB (Adds comments on Brexit, Prime Minister spokeswoman, contexton bank levy)
By Rachel Armstrong and Lisa Jucca
LONDON/HONG KONG, Feb 15 (Reuters) - Banking group HSBCHoldings has decided to keep its headquarters inBritain, rejecting the option of shifting its centre of gravityback to main profit-generating hub Hong Kong after a 10-monthreview.
The decision by HSBC's board, which Europe's biggest banksaid was unanimous, gives a boost to London's status as a globalfinancial centre, under threat since the financial crisis of2007-09 from tougher regulation and rising costs.
Yet Chief Executive Stuart Gulliver immediately warned thatthe bank could not stick with the status quo were Britain tovote in favour of leaving the European Union in a promisedreferendum, saying it would consider moving around 1,000employees from London to Paris.
Some investors had encouraged HSBC to consider moving its HQfrom Britain, partly because of a tax on banks' global balancesheets brought in after the financial crisis which had cost it$1.1 billion in 2014.
But following extensive lobbying by the banking industry,British finance minister George Osborne said in July he wouldhalve the levy and, crucially for HSBC, no longer apply it tothe overseas assets of British banks, part of efforts to help tokeep Britain an attractive place for banks.
The bank denied using the threat of moving to force theBritish government to rein in the tax.
"We had no negotiation with the government," HSBC ChairmanDouglas Flint told BBC radio on Monday. "The government was verywell aware of our view ... but there certainly was no pressureput on, or no negotiation".
The waiver on applying the levy to HSBC's overseas assetswill only come fully into effect in 2021 at the earliest,leaving the bank exposed to shifting political winds in Britainin the interim, said Investec analyst Ian Gordon in a researchnote, who nonetheless kept a "buy" rating on its shares.
Asked if the government had caved in to threats by thebanks, a spokeswoman for Prime Minister David Cameron saidOsborne's budget last year had set out that the levy wasintroduced to raise revenue and stabilise bank balance sheets."It served its purpose, it worked but it risks doing harm ifleft unchanged, he (Osborne) said that clearly last summer."
A Reuters analysis showed that moving to Hong Kong mighthave actually increased the bank's tax burden.
LESS AGGRESSIVE
"Arguably, a more benign approach in the UK to theregulation of banks, and a less aggressive tone by politicians,also played an important part in the decision," said Guy deBlonay, a fund manager at Jupiter Asset Management which holdsshares in HSBC.
"The bank can now turn its attention to succession planning,likely to revolve around its Chairman Douglas Flint initially(2017), and then CEO Stuart Gulliver (2018)".
The decision to stay in London comes after a tumultuousperiod for European banks, whose shares have tumbled on fears ofa global economic slowdown and the impact on earnings from aprolonged period of low or negative interest rates.
HSBC shares are down more than 30 percent from last Aprilwhen the group began its headquarters review, hit by China'sflagging economic growth and market turmoil.
For Hong Kong, the chance of luring back HSBC, short forHongkong and Shanghai Banking Corp, to its birthplace and to theheart of its Asian growth strategy has been lost for now.
"London is one of the world's leading internationalfinancial centres and home to a large pool of highly skilled,international talent," HSBC said in a statement. "It remainstherefore ideally positioned to be the home base for a globalfinancial institution such as HSBC."
Analysts estimated the cost of moving out of London atbetween $1.5 billion and $2.5 billion, a hefty bill to swallowunless HSBC was able to achieve clear tax and regulatoryadvantages.
Hong Kong, where HSBC was founded about 150 years ago andwhere it employs more than 20,000, was considered the strongestrelocation option as it accounts for 46 percent of HSBC's pretaxprofit.
But gyrations in Chinese markets coupled with concerns aboutChina's growing influence over Hong Kong had helped make it morelikely the bank would stick to London.
HSBC said it remained committed to its Asia "Pivot"strategy, under which it plans to invest more into China's PearlRiver Delta north of Hong Kong which already accounts for halfof HSBC's China revenue.
The Hong Kong Monetary Authority, which had earlier said itwould welcome an HSBC move to Hong Kong, said it respected theboard's decision to maintain the status quo.
(Additional reporting by Denny Thomas in Hong Kong and KateHolton, Simon Jessop, Kylie MacLellan and Lawrence White inLondon; Editing by Lincoln Feast and David Holmes)
