Strategy
HSBC, Standard Chartered Eye US Anti-China Moves - Report
The banks are working on a "worst-case scenario" in which they might be excluded by US-related transactions should the Trump administration turn the screws on mainland China. The banks both earn significant revenues in Hong Kong, and recently endorsed Beijing's new national security law on Hong Kong.
HSBC and Standard
Chartered, which in early June publicly
endorsed mainland China’s national security law on Hong Kong,
are preparing for US sanctions against China that could affect
these banks’ operations, a media report said.
The UK-listed banks, which are substantial Asia players, are
planning for a “worst-case scenario” in which the political and
trade disputes between Washington and Beijing cause restrictions
on banks serving Chinese companies and individuals, the
Sunday Telegraph said yesterday.
The ST, quoting unnamed sources, said that both banks,
which are also listed in Asia, are exploring how they might cope
with measures from the Donald Trump administration, such as being
effectively cut off from the US financial system. Lawyers and
regulatory experts said the banks needed to consider how they
could operate without using the dollar, the report
said.
This news service has contacted the banks for comment. The
ST said the lenders had declined to comment about the
matter.
Today, shares in HSBC were down about 5 per cent in London trade.
Shares in Standard Chartered were down about 0.7 per cent
(source: London Stock Exchange).
The situation of these banks is a sensitive one. Both have
substantial business in Hong Kong, and indeed HSBC’s name comes
from “The Hong Kong and Shanghai Banking Corporation”. Earlier
this year, both banks issued statements supporting China’s
controversial security law for Hong Kong. Critics say that
Beijing has ended Hong Kong’s separate legal status under the
“One Country Two Systems” framework agreed between the UK and
China when the former British colony was restored to China in
1997. (That framework is due to end anyway in 2047.) Both banks
are also based in London and any move to sever their links with
the US would be awkward for the UK government as it wrestles with
post-Brexit trade arrangements.
The political situation is, however, complicated by the fact that
the approach an American government takes towards China might be
different if Democrat challenger Joe Biden wins the US presidency
in November.
When HSBC and Standard Chartered backed Beijing’s approach to
Hong Kong, Mike Pompeo, US secretary of state, reportedly
attacked HSBC in public, saying it supported the sanctioned
leaders. He claimed that Chinese officials had bullied HSBC into
“shutting accounts for those seeking freedom.”
The ST noted that Mark Tucker, HSBC chairman, and Noel
Quinn, chief executive, have avoided public comments on the
matter, but Standard Chartered chief executive Bill Winters last
week admitted that the rising tensions were “troubling” and a
“tremendous preoccupation for us.”
Another media report a few weeks ago said that Standard Chartered, and Citigroup, had tightened client scrutiny to avoid falling foul of US sanctions against officials in Hong Kong.