The Controversial Law on Hong Kong Gets Support from Two British Banks-HSBC and Standard Chartered

The Controversial Law on Hong Kong Gets Support from Two British Banks-HSBC and Standard Chartered


  • The New Chinese Law regarding Hong Kong is likely to impact the businesses operating there
  • HSBC and Standard Chartered both are British banks with significant business interests in Hong Kong
  • Many business institutions have come in support of the proposed Chinese law
  • The two banks must protect their business interest in the region which could get impacted by showing any dissent with the government

The new Chinese law governing its relationship with Hong Kong came as a response to the widespread democracy protests that have marred the city last year. The United Kingdom, when it had handed over Hong Kong to China in 1997 had signed a treaty so that Hong Kong would have separate constitutional status and a different governance structure than of rest of China. The treaty which gave the people of the city right to free speech and right to protest against the government has been used to express the dissent against Chinese officials and policies on several occasions. The new law, which is touted to be aimed at curtailing many of the liberties that would not only impact the day to day lives of ordinary Hong Kong citizens but could also greatly impact the businesses operating there. The Banking industry in Hong Kong, in particular, has an international flavour with the laws of the city, allowing a greater degree of flexibility to international banks to operate in the city.

HSBC and Standard Chartered the two British banks have significant business interests in Asia. Both banks though headquartered in the United Kingdom, have in the recent past aggressively expanded in most of the important markets in the region, especially in India and China. Given the revenue that both the banks get, especially in China and Hong Kong, it would work as the biggest detriment for both if they get into any kind of controversy with the Chinese government.

Chinese regulations do not give much flexibility to foreign banks to operate in their country. The situation with HSBC and Standard Chartered is, however, quite different, both these banks, though western banks have been able to make deep inroad in China with a significant amount of their revenues coming from that country. The new laws thus will do less harm to the business of these banks in the region than taking a contrary stance against the law, which will certainly anger the Chinese government.

Several other corporates both from the banking and non-banking sectors have also voiced their support for the new legislation. The protests last year not only hampered a lot of the businesses of these companies, but several of them were also subject to punitive action by the Chinese government. Cathey Pacific, which is a Hong Kong domiciled global airline major, had to suspend many of its staff after they were found to be an accomplice in anti-government protests, later on, CEO of the company Rupert Hogg and one of his top deputies had to resign over the same. Moreover, the international support for the protests has also been waning, the United States of America no longer considers Hong Kong autonomous of China and other neighbouring countries have also remained muted in response to the recent Chinese move. Under such circumstances taking an adverse position against the law can only result in suffering business losses.

HSBC Holdings Plc

The UK domiciled international banking and financial services company, HSBC Holdings Plc (LON: HSBA) has a wide global footprint. The bank has been consistently ranked amongst the top ten largest banks in the world, and it is the largest within Europe. This banking company though currently headquartered in London has its origins in Asia. In 1865 it was incorporated in the erstwhile far-east British territory of Hong Kong. Over the years the bank has expanded to be now present across Asia, Oceania, Africa, the European continent, North America and also in South America. The company caters to over 38 million customers across the globe.

The shares of the bank are listed primarily on two stock exchanges, at the London Stock Exchange, where it gets traded with the ticker name HSBA and at the Hong Kong Stock Exchange where its shares are traded with the ticket number 5. The bank also has three secondary listings, one at the New York Stock Exchange where its shares are traded with the ticker name HSBC, in Bermuda Stock Exchange where its shares are traded with the ticker name HSBC.BH and at Euronext Paris where the shares are traded with the ticker name HSB.

The CEO of the company in a media statement released on social media platform WeChat had stated that the bank supports the new law and regulations and believes that it will help to recover and rebuild the economy of the city while maintaining the principle of one country two systems.                     

The shares of the company rose by 1.3 per cent in Thursday’s trading on the Hong Kong Stock Exchange after the news of the statement of its CEO came out, while the share prices on the London Stock Exchange up by 4.81 per cent on June 5, at 13:21 PM GMT.

Standard Chartered PLC

Standard Chartered PLC (LON: STAN) is a multinational banking company, based in the United Kingdom. The group is listed on the London Stock Exchange with additional listing at National Stock Exchange in India and Hong Kong Stock Exchange.

The group’s caters to companies of all size - from start-ups to multinational corporations by offering them with a varied range of services and products. The group present headcount stands around 86,000 people, spread across 125 different countries around the world. The bank has its presence in 60 and now boasts of around 1,026 branches worldwide.

Similar to HSBC, Standard Chartered had also issued a statement on the new law, whereby it stated that it believes that new national security law maintains long term economic and social stability of the city.  The share prices of the company rose by 1.8 per cent on Thursday's trade on the Hong Kong Stock Exchange after the news broke, while the shares prices of the company on the London Stock Exchange have risen by 6.5 per cent on June 5, at 13:17 PM GMT.


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