HSBC comes out fighting against ‘groundless’ rumours targeting its China business

HSBC said it would continue to invest in its China business despite resumption of planned lay-offs globally
Bank defends itself versus talk in mainland press it may be forced to exit China

HSBC

Chad Bray

Published: 6:30pm, 19 Jun 2020

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After a series of attacks by Chinese media and netizens on HSBC's business culminating in one report suggesting it may be forced to exit the world's second-biggest economy, the bank came out swinging on Friday.

The London-headquartered bank pushed back against “groundless” rumours casting doubt over about the future of its mainland China business on social media platform WeChat after it announced this week it would resume 35,000 planned job cuts globally.

The bank, which is based in London, but generates most of its profit in Asia, said China remains “an important strategic market” for the bank and has been so for more than 150 years, noting it has been a “staunch supporter and active participant” in the country’s opening up over the past 40 years.

“Going forward, we will continue to invest in our China business, services, talents and technology. As always, we will continue contributing to the sustainable development of China’s economy,” the bank said in a post in Chinese on its official WeChat account.

04:41

HSBC doubles down on Asia in massive staffing overhaul

The bank, one of three lenders authorised to issue currency in Hong Kong, has been slammed by mainland media and netizens across China in the past 18 months over its involvement in a US inquiry into Huawei Technologies Company and for not immediately showing public support for a controversial national security law tailored for Hong Kong.

Global Times, a nationalistic tabloid affiliated with Communist Party mouthpiece People’s Daily, speculated this week that the bank’s resumption of planned job cuts as part of a massive restructuring “may mark the beginning of the end for the embattled British bank in China”.

The tabloid newspaper, which publishes both a Chinese and an English edition, on Wednesday also quoted an unnamed Beijing “observer” who said the bank could be pushed out of the mainland market over the Huawei situation.

HSBC announced in February that it would cut its headcount by 35,000 as part of an effort to reduce its annual costs by US$4.5 billion by 2022 in its third major reshaping in a decade. As the coronavirus pandemic worsened globally in March, the bank said it would temporarily pause the “vast majority” of those lay-offs.

On Wednesday, Noel Quinn, the HSBC chief executive, said the bank planned to resume the job cuts as the efforts to reduce the company’s costs was “even more necessary today” given the economic outlook. As part of the restructuring plan, the bank is doubling down on growth markets in Asia, particularly the future growth of the Greater Bay Area.

Quinn has said the bank would shift capital from underperforming businesses in Europe and the US to growth markets, such as Hong Kong and mainland China. (Hong Kong and mainland China accounted for more than 100 per cent of its pre-tax profit last year).

In May, HSBC agreed to take full control of its Chinese life insurance joint venture as it took advantage of new rules that have further opened up China’s financial services industry.

HSBC did not name the Global Times in its statement on Friday.

In a June 4 commentary about HSBC’s support of the national security law, the Global Times said, “we still need to watch HSBC's moves in the future related to issues such as Huawei. There is a bottom line that HSBC can't cross, otherwise the bank could lose the China market.”

The bank was forced to go on a charm offensive in Beijing last summer after providing documents to US prosecutors in an investigation into the Chinese telecommunications company, which saw Huawei chief financial officer Meng Wanzhou arrested in Canada on US charges.

HSBC quietly told Beijing officials at the time that it had no choice but to comply because it had an obligation under US financial regulations to do so. Wanzhou is fighting extradition to the US, and her lawyers have accused US prosecutors of misleading a Canadian court about their evidence in the case.

Peter Wong Tung-shun, HSBC’s Asia-Pacific chief executive, signed a petition supporting a controversial national security law for Hong Kong. Photo: Handout

The bank also was criticised by former Hong Kong chief executive Leung Chun-ying on his Facebook page on May 29 for staying silent on the national security law for Hong Kong, which some fear could restrict free speech and other liberties in the city.

A few days later, the bank posted a photograph of its Asia-Pacific CEO Peter Wong signing a petition in support of the law and publicly supported the legislation on one of its social media accounts in the mainland.

Lawmakers in the US and the UK have since criticised HSBC and its Hong Kong rival, Standard Chartered, expressing support for the law.

“We respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems’,” HSBC said in a carefully worded social media post. “We are fully committed to playing our part in supporting Hong Kong now and in the future.”

HSBC’s shares rose 0.67 per cent to close at HK$37.35 in Hong Kong on Friday.

This article appeared in the South China Morning Post print edition as: HSBC refutes rumours about being ‘pushed out’ of mainland market

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