Jun 10, 2020

HSBC wobbles on a geopolitical tightrope

A person with knowledge of the internal discussions said HSBC had "Absolutely no choice" but to back Beijing over the law given its heritage in Hong Kong and the size of the business there. The backlash over the security law - which sparked a new wave of street protests and caused the US to threaten reprisals - comes only two months after HSBC made the contentious decision to cancel its dividend for the first time in 74 years, bowing to pressure from the Bank of England. Retail shareholders in Hong Kong, who own about a third of the bank, threatened to sue for lost earnings and it reignited a debate over whether HSBC should moves its domicile back to Asia from London. Another executive said the main issue at stake was not east-west tensions, but rather "Pressure from China versus the potential backlash from Hong Kong itself, given that the entire economic value of HSBC is tied to it". "We are uneasy at the decisions of HSBC and StanChart to publicly support the proposed new national security law without knowing the details or how it will operate in practice," said David Cumming, chief investment officer for equities at Aviva Investors, a top-20 shareholder in both banks.

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