There can be few laughs in the boardroom of HSBC these days. The directors have managed the baleful double of infuriating their Hong Kong shareholders by being forced to scrap the dividend, while upsetting their British customers by kow-towing to the Chinese and their harsh new laws.

The bank can argue that it had no control over either of these events, but together they make straddling here and there increasingly painful. So far, there has been no rush for the exit by depositors at Midland Bank or its sibling First Direct, the UK businesses. However, as the anti-Chinese rhetoric increases here, HSBC may be forced into expressing more support for the regime there, or face “consequences” as the Chinese ambassador threatened after Huawei was shut out from UK markets.

It says much for the market’s view of UK bank shares that despite this, HSBC has been the least poor performer so far this year. This may indicate that money doesn’t care about the politics, but it has moved veteran analyst Ian Gordon at Investec to decide that the shares have fallen far enough even though he expects halved profits, a “rebased” dividend, and no return to last year’s payout before 2024.

Behind this grim prospect is the question of whether HSBC is really a British bank at all. It has predominantly British directors and UK residence, but with 92 percent of revenues coming from China and Hong Kong, its fortunes must be there, not here. It is Midland that is the anomaly. Buying it provided the excuse to transfer the group’s HQ from Hong Kong to London at another moment when tensions were rising.

With bank shares so depressed, and with dividend decisions subcontracted to the City authorities, selling the UK bank today would be a thankless task. No domestic buyer that could afford to pay would be allowed to own it.

However, a demerger would allow the market to price both, accelerating the process which is already under way, to turn HSBC into a Chinese bank, overtly rather than covertly regulated by threats from an increasingly belligerent regime. There are other UK-based businesses with most of their business overseas, like BAT or Rio Tinto, so the listing could stay here, including membership of the FTSE100.

This process is neither cheap nor easy, as Lloyds Banking discovered when trying to excise TSB from the group. In that case, the costs almost equalled the sale proceeds. However, the current two-way stretch at HSBC is only likely to get worse, to the point where even the magnificent salaries at the top of the bank fail to compensate for having to be nice to the Chinese authorities while pacifying the bolshy British consumer.

A familiar train of thought

You may not have read the whole of the 2020 report from the Infrastructure and Projects Authority, published last week. Some of those poor souls at the Department for Transport would like you to do so, because the successful A14 road upgrade has “overturned the widely held belief that UK infrastructure is always overdue and over budget.”

Sadly, the IPA is unable to say the same thing about the DaFTest project on the list, the much bigger and uglier HS2. “Successful delivery of the project appears to be unachievable. There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable.”

Thus does the IPA join every other external examination of this Cameroonian vanity project in saying that it is a waste of money and scarce resources. A tragic little footnote records that HS2 “was reset…in February 2020 with an amended cost and schedule…and strengthened governance and control.” Goodness, if only they had thought of resetting it earlier.

They could reset it today, before any more of the £109bn has been squandered. Building almost anything else would represent better value for money than this railway. Completing the electrification of the main line to Cardiff, or that out of St Pancras could be done quicker, and for a small fraction of the projected cost.

The report rather coyly points out that it is too early to say how much impact Covid-19 will have on both the cost of construction and our enthusiasm for public transport. However, it’s a racing certainty that it will increase one and decrease the other. Now which way round would that be?