Senior British and U.S. politicians criticised HSBC and Standard Chartered on Thursday after the banks backed China's national security law for Hong Kong, in conflict with the British government's opposition to the proposed legislation.
In a break from their usual policy of political neutrality, the British banks on Wednesday expressed support for the law even as it drew global condemnation, including from Britain, and revived anti-government demonstrations in the Asian financial hub of Hong Kong. Shares in HSBC, which is Britain's biggest bank, fell more than 1% in London, paring earlier gains in its Hong-Kong listed stocks while Standard Chartered shares in London were flat.
"I wonder why HSBC and StanChart are choosing to back an authoritarian state's repression of liberties and undermining of the rule of law," Tom Tugendhat, British Conservative Party member and chair of the Foreign Affairs Committee tweeted. Florida senator Rick Scott tweeted that HSBC had "chosen profits over human rights."
Asked about the position taken by both banks, a spokesman for British Prime Minister Boris Johnson said: "If China proceeds with this security legislation, it would be in direct conflict with its obligations under the Joint Declaration ... our message is both clear and shared by our international partners."
Asked specifically whether Britain was concerned by the banks' actions, the spokesman said: "The answer I've given you is a direct response to HSBC and Standard (Chartered)." The United States, Australia and Canada have all criticised China for imposing the law on the former British colony, which was handed back to China in 1997 but guaranteed autonomy in a Sino-British Joint Declaration.
People who said they are HSBC customers posted on social media that they will close their accounts in response to HSBC's backing of Beijing. HSBC and StanChart declined to comment. The reaction highlighted the predicament facing the two banks, based in Britain but with deep roots in China where they are trying to expand when the country's ruling party is clashing with Britain and the United States.
Hong Kong accounted for 90% of HSBC's pre-tax profit and 41% of StanChart's in 2019, showing the importance of the Asian financial hub to the banks' bottom line. "The investment case for HSBC is clouded by the outlook for Hong Kong and steps by China to impose greater control over the autonomous region," said Will Howlett, equity analyst at HSBC shareholder Quilter Cheviot.
The Global Times, which is published by the People's Daily, the official newspaper of China's ruling Communist Party, said that HSBC's move should have come earlier. Some of HSBC's corporate peers including Cathay Pacific Airways (0293.HK) have faced retribution from Beijing for perceived support for the anti-government protesters.
HSBC backing comes after former Hong Kong leader Leung Chun-ying on Friday criticised the bank for not making its "stance" clear on the law and said that its China business could be "replaced overnight" by banks from China and other countries. Some employees of HSBC and StanChart noted that the business imperative was likely the reason 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 started to take a stand, it will be no surprise that other banks will start to follow suit."