* UK tax rise will cost pair $2 bln/yr and may rise again
* Investors say hard analysis needed on whether to move
* Bosses assessing viability of a move -sources
* Banks have other priorities before HQ decision -analysts
By Steve Slater and Sinead Cruise
LONDON, April 19 (Reuters) - HSBC and StandardChartered are looking at the viability of quittingLondon for a new home in Asia because a big jump in a tax on UKbanks makes staying in Britain increasingly painful.
Several investors told Reuters they want the two banks to doa thorough analysis on whether it makes sense to move afterBritain raised the bank tax by a third last month.
Some are expected to quiz bosses on it at shareholdermeetings, including at an investor gathering in Hong Kong onMonday.
"There is a very clear risk that HSBC and StanChart reach apain threshold where they think it is no longer worth staying inthe UK," said Richard Buxton, head of equities at Old MutualGlobal Investors, which owns HSBC shares and who said the bankwas reflecting on a move.
The tax has increased eight times since being introduced in2010 to ensure banks make a "fair contribution" after thefinancial crisis. The latest rise was seen as a popular moveahead of Britain's May 7 election.
Aberdeen Asset Management, the second biggest shareholder inStandard Chartered, with an aggregate 9.4 percent stake, saidthe bank should consider the option.
Senior management are already assessing the situation,people familiar with the matter said. Four years ago, HSBC saidit would review its domicile in 2015, although the bank declinedto comment if or when any review might occur.
"It's a live conversation internally because it's an issuebeing raised by investors and sell-side analysts," said a personclose to one of the banks, who asked not to be named as thediscussions are private.
The banks, who make most of their profits in Asia, face acombined $2 billion bill this year under the annual UK bank tax,up from $1.5 billion last year and almost double what they paidin 2013.
The opposition Labour Party plans to increase it by 800million pounds to 4.5 billion pounds ($6.8 billion) a year forthe banking industry as a whole, if it wins power, to pay forchildcare for three and four year olds. Labour is neck and neckwith Prime Minister David Cameron's Conservatives in polls.
Another hefty rise could be the final catalyst and forcebanks to move, Bernstein analyst Chirantan Barua said.
HSBC, which has described the levy as a tax on staying inLondon, faces a bill of $1.5 billion this year, about 7 percentof expected profits. Standard Chartered is set to pay $500million, or about 9 percent of earnings.
"TOO MANY MOVING PARTS"
HSBC says it has two "home" markets, Britain and Hong Kong.It moved from Hong Kong to London in 1993 when it bought MidlandBank and its most likely move would be back to its former home,one of the few places that could handle its $2.6 trillionbalance sheet.
The bank began life in Hong Kong 150 years ago, with rootsas a financier of trade between Europe and Asia. It issues mostof the territory's bank notes and has made $24 billion inprofits there over the last three years, compared to a $4billion loss in Britain over the same period.
London has been home to Standard Chartered since it wasformed in 1969 and its most likely new home would be Singapore,from where most of its businesses are already run.
Analysts said the cost of moving could be between $1.5billion and $2.5 billion per bank.
HSBC told UK lawmakers in February, before the levyincrease, the best location was still Britain. It had postponeda review in 2011 because Chief Executive Stuart Gulliver saidthere were too many moving parts to make a rational decision.
Industry sources said that could still be the case for bothbanks. They are trying to improve profitability, cut costs, sellbusinesses, deal with old misconduct issues and simplify.Standard Chartered also gets a new CEO next month, Bill Winters,who may want to raise capital.
"On a 10 or 15 year view, I'd be surprised if both of themare still here. But I don't think it's an issue for theshort-term, they have bigger priorities," John-Paul Crutchley,UBS banking analyst, said.
Yet it could be worth it. JPMorgan analyst Raul Sinhaestimated the higher UK bank levy will cut Standard Chartered'searnings by 13 percent in 2017, while a move away from Britaincould lift its return on tangible equity, a key profitabilitymeasure, by 1.6 percentage points to 12.7 percent.
Britain is also forcing banks to separate domestic retailoperations by 2019, so if HSBC is serious about moving, it couldspin off its UK business at the same time, analysts said.
But the complexity of all the issues in the mix make adecision difficult. These include Europe's pay rules for staff,the risk of losing staff, how capital and leverage rules inplaces like Singapore compare, access to capital, politicalstability, credit ratings and the risk of regulatory change inany new jurisdiction.
Britain's strongest card is London itself, which has alwaysranked alongside New York as the most attractive globalfinancial hub, in the Z/Yen Global Financial Centres index.
Banks, accused of sabre-rattling with threats to quitbefore, are also wary of stepping into a political minefield.
"StanChart and HSBC might well be firing warning shots ontheir possible relocation to ... tell politicians they won't bebullied," said Paul Mumford, senior investment manager atCavendish Asset Management, which owns stock in both banks.
"But I think unless these firms start feeling that somepoliticians are in tune with what they offer the UK, then wemight see genuine action ... the threat is there," he said. ($1 = 0.6653 pounds) (Editing by Jane Merriman)
HSBC Holdings (HSBA)
Standard Chartered (STAN)
