HSBC abandons political neutrality . . .
Last week, on a plastic table outside a Hong Kong metro station, HSBC Asia Chief, Peter Wong, signed a petition backing China’s new national security law for Hong Kong. In posting a photo of the event, HSBC shed its century and a half long dedication to maintaining official political neutrality. This photo was no social media gaffe, but rather, the product of a year-long internal discussion about if and when HSBC would prominently display its loyalty to Beijing.
Loyalty is where the profits lay . . .
Over the past decade, HSBC’s profits have steadily shifted from Europe to Hong Kong and the rest of Asia. In 2007, Europe accounted for twice as much pre-tax profit as Hong Kong, but for the last four years, Europe has accounted for negative profits while Hong Kong has increasingly become the bank’s largest profit source. In 2018, the bank’s aspirations in Hong Kong and mainland China hit a rocky patch – HSBC provided U.S. prosecutors with information to help build a fraud case against Meng Wanzhou, Huawei’s Chief Financial Officer. When HSBC’s involvement in the case became public, according to the Financial Times, HSBC executives were forced to apologize to Chinese officials. But that wasn’t the end of it. According to the Wall Street Journal, in a May 29 Facebook post, former Hong Kong Chief Executive Leung Chun-ying called on HSBC to explicitly support the new security law or risk losing business, writing that, “HSBC’s China business can be replaced by banks from China or other countries overnight.”
HSBC a bellwether?
HSBC is both a Goliath of international banking and a symbol of Britain’s historical ties with China. British Labour party frontbenchers and U.S. Secretary of State Mike Pompeo all attacked HSBC and cautioned that HSBC should serve as a cautionary tale. HSBC is the largest foreign bank in Canada, with C$107 billion in assets in Canada, 130 branches, and 5,000 domestic employees. Canadian corporate clients work with HSBC precisely because of its deep connections in China – connections that are becoming increasingly politicized.
- Financial Times: HSBC wobbles on a geopolitical tightrope
- The Japan Times: HSBC’s tightrope act opens up internal fault lines in Hong Kong turmoil
- Wall Street Journal: Behind HSBC’s rare foray into politics over Hong Kong