By Max Colchester 

LONDON-- HSBC Holdings PLC said Friday it was reviewing whether to move its headquarters outside the U.K., a high stakes decision which comes as the bank faces tighter regulatory scrutiny and higher taxes in the country.

The lender, which has large Asian operations but is based in London, said in a statement that it didn't know when a decision would be made.

HSBC's management has long wrestled with whether the bank should be domiciled in the U.K. and in the past it conducted reviews every three years on whether to relocate. This stopped following the financial crisis as the bank waited for regulatory rules to be finalized.

On Friday the bank's Chairman Douglas Flint said that the final regulatory rules were taking shape. "As part of the broader strategic review taking place, 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," according to a copy of a speech Mr. Flint is set to give at the lender's annual shareholder meeting.

Friday's announcement comes amid campaigning for a U.K. general election on May 7, during which political parties have targeted banks as potential cash cows to fund an array of new policies.

Bank executives are irked by recent moves to again raise the U.K.'s bank levy. The levy, which was launched in 2010, is determined as a percentage of a bank's balance sheet and HSBC, which has vast global operations, pays the most--$1.1 billion last year. Non U.K. headquartered banks are only taxed on their U.K. balance sheets.

Other London-based lenders with big foreign operations have been affected too. Standard Chartered PLC's investors have talked about whether the bank, which does most of its business outside Europe, needs to be headquartered in London. The bank is reviewing whether to move its headquarters abroad but is waiting for the elections to pass before making a decision, according to a person familiar with the matter.

The cost of moving wouldn't be punitive as both banks have substantial operations in Hong Kong and Singapore respectively, say analysts. Bernstein Research puts the moving cost at between $1.5 billion to $2 billion. However, questions remain whether other countries would want to regulate and potentially bailout such large banks.

HSBC moved its headquarters from Hong Kong to London in 1993 after it acquired a U.K. bank, Midland. HSBC in March announced that it was moving its U.K. retail operation's headquarters and around 1000 jobs out of London to the city of Birmingham. This has raised speculation among bank executives that it would look to spin off its British retail bank, a move that the lender has so far denied. In 2014 Asia, Middle East and North Africa generated 70% of the bank's adjusted profit before tax.

The bank has suffered a bruising couple of months at the hands U.K. politicians. HSBC's Swiss unit has been under the spotlight for years, following the theft of data by a former employee and the opening of a criminal investigation by U.S. authorities into its alleged aiding of tax evasion. In the last past months Chief Executive Stuart Gulliver and Mr. Flint were hauled in front of British lawmakers to discuss the bank's efforts to clean up its Swiss operations. Senior board members were also criticized for their perceived lack of oversight.

In an effort to appease shareholders, the bank has hired headhunters to search out replacements for the chairwoman of HSBC North America Holdings, Rona Fairhead, and HSBC's deputy chairman, Simon Robertson, according to a person familiar with the matter.

Meanwhile the bank has suffered underwhelming financial results as it wrestles with higher compliance costs. HSBC recently cut some medium term financial targets.

Write to Max Colchester at max.colchester@wsj.com

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