Between the West and Beijing, the British banking giant HSBC has made its choice: China. The former Hong Kong and Shanghai Banking Corporation intends to take advantage of its unique position – the most Chinese of Western banks and the most European of Chinese banks – even if it means putting itself under Beijing’s orders.
During his hearing at the end of January, Noel Quinn did not lead off against the deputies of the Committee on Foreign Affairs of the House of Commons. The CEO of HSBC was summoned following the heated controversy created by the closure of the accounts of several activists of the Hong Kong democratic movement, in the sights of the Chinese authorities.
Faced with the hostility of parliamentarians to this surrender to Chinese demands, the banker repeated his leitmotif. “I am not in a position to make a moral or political judgment on this matter. We must respect the law, ”he said of a request from the Hong Kong police to close the accounts of figures in the pro-democracy struggle.
A giant with feet of clay
But there was no question of showing contrition, of apologizing. Quinn dodged all the questions. He defended tooth and nail his closest associate, Peter Wong, head of Asian activities at HSBC, who had given public support to the relentless crackdown orchestrated by Beijing in the administrative area of Hong Kong supposed to be autonomous.
On paper, HSBC is a financial supermarket offering the full range of services in Europe, Asia and the United States. But the red and black sign is a giant with feet of clay. Pre-tax profit fell by a third in the third quarter of 2020. Due to the pandemic, the bank was forced to build large bad debt provisions and suspend its dividend. The title has lost 40% of its value since the start of 2018.
In addition, the group is forced to cut its workforce in the United States and Europe, highly loss-making subsidiaries. Its leaders are considering selling the networks of American agencies, but also French (the former Credit Commercial de France). In addition, in the West, the brand has never recovered from the scandal of the Panama Papers and SwissLeaks of drug money recycling, organized crime or tax evasion that had splashed its American, French and Swiss subsidiaries. in 2015-2016.
Between the devil and the deep sea
HSBC’s setbacks in the case of the violation of sanctions against Iran by the Chinese telephone group Huawei have led to it being threatened with being on the blacklist established by the Chinese authorities of companies deemed “unreliable”. Geopolitical struggles mean that the bank, whose HQ is based in London, is caught between the Chinese anvil and the hammer of the anti-Chinese “Anglosphere” grouping, around the United States, the United Kingdom, the Australia, Canada, and soon India and Japan.
It was no longer possible to oscillate between the two blocks. The HSBC staff was to give pledges of loyalty to Beijing. Indeed, listed in London and Hong Kong, HSBC makes 86% of its profits in Asia. The “Perfume Bay”, which accounts for 36% of its total revenues and over 50% of its profits, is the springboard for expansion in China itself. For the new billionaires of the “Middle Kingdom”, the banking juggernaut serves as a hub for investing their fortune thanks to the vast offshore platform that Hong Kong has always been.
Reflecting the general sentiment, City analysts applaud China’s choice. “Outside of Asia, HSBC is worthless. To prosper, the bank must focus on the Far Eastern markets, in accordance with its DNA, in order to create shareholder value, ”underlines the London broker Autonomous.
A birth linked to opium trafficking
Indeed, the largest European financial conglomerate is guided by its history, which marries that of Hong Kong. The bank and the former crown colony came into being together 155 years ago. HSBC was created by Scottish traders involved in opium trafficking. In 1992, fearing a Chinese takeover after the handover, scheduled for 1997, it transferred its headquarters to London, while retaining the heart of its business in Hong Kong. At the same time, China was opening its borders and promising to be a fabulous market.
From the start of the 2000s, HSBC was the first foreign bank to set up in China, which is asserting itself as the engine of the world economy. Under Mao, it had been the only international financial institution to maintain an uninterrupted presence in the country. Today, its main shareholder is the Chinese insurer Ping An, with 8% of the capital. Formerly in the service of Her Majesty, HSBC now sails under the Chinese flag.
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