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HSBC, Standard Chartered criticised after backing Hong Kong security law

On Thursday, senior British politicians criticised HSBC and Standard Chartered after the banks backed China’s national security law for Hong Kong, contrary to the British government’s opposition to the proposed legislation.

On Wednesday, in a shift from their normal stance of political neutrality, the British banks voiced support for the law even though it prompted global condemnation, including from Britain, and sparked anti-government protests in the Asian financial hub of Hong Kong.

HSBC shares, the largest bank in Britain, dropped 1 per cent in London, paring earlier gains in its Hong-Kong listed stocks while Standard Chartered increased slightly in London against a 1.2 per cent decline in the FTSE 350 banks index.

“I question why HSBC and StanChart chose to back an authoritarian state’s repression of liberties and undermining of the rule of law,” Tom Tugendhat, Conservative Party member and chair of the Foreign Affairs Committee tweeted.

People who said they are HSBC customers shared on social media that they would close their accounts in response to HSBC’s endorsement of Beijing.

HSBC and StanChart refused to comment.

The response highlighted the difficulty faced by the two banks, headquartered in Britain but with deep roots in China where they attempt to expand when the country’s ruling party clashes with Britain and the United States.

In 2019, Hong Kong accounted for 90 per cent of HSBC’s pre-tax income and 41 per cent of StanChart’s, demonstrating the value of the Asian financial hub to the banks’ bottom line.

“HSBC’s investment case is clouded by the Hong Kong situation and steps by China to exert greater control over the autonomous region,” said Will Howlett, equity analyst at HSBC shareholder Quilter Cheviot.

The Global Times, published by the People’s Daily, the official newspaper of China’s ruling Communist Party, reported that HSBC’s shift should have come sooner.

Corporate peers of HSBC including Cathay Pacific Airways have faced backlash from Beijing for alleged support for the anti-government demonstrators.

On Friday, HSBC support comes after former Hong Kong leader Leung Chun-ying criticised the bank for refusing to make its “stance” transparent on the law and said that its China business could be “replaced overnight” by banks from China and other nations.

The United States, Australia and Canada have all blamed China for enforcing the law on the former British colony.

Some HSBC and StanChart workers noted that the business imperative was likely the explanation for the support.

“The reason for the statement is white terror, forced action to protect the bank’s business,” Wong, an HSBC staffer in Hong Kong who declined to give his full name, told Reuters.

“When (these) two banks begin to take a stand, it won’t come as a surprise that other banks will start to follow suit.”

A StanChart employee, Tony, who also declined to give his full name, said: “The commercial sector of Hong Kong is certainly controlled by the Chinese government as we need them for our business.”

But the Hong Kong Finance General Employee Union, established in September to unite local financial professionals amid pro-democracy protests, have opposed the move.

“HSBC and Standard Chartered should explain if they are betraying Hong Kong citizens when most of the governments from the western world are against this evil law and supporting people of Hong Kong,” said union chairman Ka-Wing Kwok.

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