London Daily

Focus on the big picture.
Wednesday, Jun 24, 2026

How HSBC got caught in a geopolitical storm over Hong Kong security law

How HSBC got caught in a geopolitical storm over Hong Kong security law

Bank’s future remains uncertain as it finds itself under pressure from Beijing and Washington
HSBC has been a fixture of the Hong Kong economy for more than a century. However, its origins as a financial bridge between Asia and the west have placed it in the centre of a modern day geopolitical storm. Facing pressure to choose sides as Hong Kong is convulsed by the new security law imposed by Beijing and Donald Trump pursues a trade war with China, HSBC is in danger of finding itself without friends in either direction.

Headquartered in London, but dependent on Hong Kong and China for profits, HSBC has been affected by tensions between Washington and Beijing – and shareholder concern over its controversial acceptance of an authoritarian crackdown in its key market.

Last week that high-wire act was thrown into sharp relief when, despite HSBC’s public overtures to Beijing, a Chinese state-run newspaper reported the bank could be included on an official list – as yet unpublished – of ‘unreliable entities’ that threaten the country’s sovereignty. Concerns over that threat were alleviated on Monday when the Chinese insurer Ping An, its largest shareholder, delivered a vote of confidence by increasing its stake in the bank – allowing HSBC’s shares to lift from a recent 25 year low.

Nonetheless, HSBC is struggling to navigate the politics of modern Hong Kong – and its image has paid a price for its decision in June to publicly support the controversial security law for the territory.

David Kynaston, a historian and author of ‘A Lion Wakes: A Modern History of HSBC’, said it was a shock move by a bank that has traditionally shielded away from politics. “It was still a very unprecedented thing for them to do. And they also, I suppose, had to make the calculation … given that they get a significant share of their profits from Hong Kong itself” he said.

Hong Kong, where HSBC employs around 30,000 of its 235,000 staff and makes more than half its profits, is the bank’s lifeblood and origin story. HSBC’s Scottish founder, Sir Thomas Sutherland, envisioned a Hong Kong based lender that would finance trade between Europe and Asia when he launched the bank in 1865. In the century-plus that followed, the Hongkong and Shanghai Banking Corporation (HSBC) became a global lender as it bought rivals in the US and Europe, and shifted its head office to London as part of its takeover of Britain’s Midland Bank.

However HSBC’s international commitments are now being tested, as it finds itself caught in the middle of a trade row between Washington and Beijing, and the target of outrage over China’s tightening grip on Hong Kong. This could have material consequences for a bank that plans to expand further in Asia – the source of around 85% of its profits – and generate more income from managing the assets of China’s burgeoning class of affluent citizens.

The US secretary of state, Mike Pompeo, is among the politicians trying to force HSBC’s hand. He has launched repeated attacks on the bank since June and accused of a “corporate kowtow” to Beijing amid a Chinese crackdown on pro-democracy protests.

Those words carry the threat of severely damaging action for HSBC. In July, Trump signed the Hong Kong Autonomy Act, which gives America the power to punish financial institutions that transact with officials and organisations supporting the security law. If, for instance, HSBC is punished under the act and the US withdraws the bank’s license for dollar clearing, handling payments in dollars, which is vital for an international bank like HSBC, it would be in deep trouble.

Pompeo’s broadside came after HSBC publicly backed the launch of China’s national security laws in Hong Kong in early June, just days after Hong Kong’s former leader CY Leung criticised the bank for failing to take a stance on the legislation. Those laws are aimed at quashing long-running protests in Hong Kong by banning any activities said to endanger China’s national security including separatism, subversion and terrorism.

HSBC revealed via the Chinese social media platform WeChat that its Asia Pacific chief executive Peter Wong signed a petition supporting Beijing’s new rules. HSBC said: “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’”.

It represented a marked shift in tone from the early 1990s, when China was a lesser economic power and HSBC decided to shift its headquarters to London, shortly after the killing of hundreds of protesters in Beijing’s Tiananmen Square in 1989. The shifting of gravity was officially done at the request of the Bank of England following the Midland deal, but the attack on student democracy protesters in Tiananmen made it less likely that HSBC would be criticised publicly for the move.

Over thirty years later, HSBC is facingcriticism for backing Beijing’s national security laws and putting profits first. Within days of Wong’s ink drying on that controversial petition, HSBC was censured in a letter by Labour frontbenchers, who warned that HSBC could face boycotts.

The British foreign secretary, Dominic Raab, later reprimanded HSBC for supporting the law, saying that the rights of the people of Hong Kong “should not be sacrificed on the altar of bankers’ bonuses”.

HSBC also drew rare public criticism from one of its top 20 investors, Aviva Investors. Their chief investment officer, David Cumming, said he was “uneasy” about the bank offering support for the law “without knowing the details of the law or how it will operate in practice”.

“If companies make political statements, they must accept the corporate responsibilities that follow,” he said, adding that he expected HSBC and fellow British lender Standard Chartered – which has also been caught in the geopolitical crossfire – to speak out publicly if there are any abuses of democratic freedoms as a result.

But HSBC has not been handed a free pass from Beijing either. In late July, HSBC was forced to rubbish claims by Chinese state media that it had framed its technology champion, Huawei, and had been an accomplice in US efforts to arrest its chief financial officer, Meng Wanzhou, in Canada in late 2018. The bank has said it handed over documents to the US Department of Justice only after it was ordered to do so.

Some of HSBC’s Hong Kong investors – who hold around a third of HSBC’s shares –have also grown weary of the UK’s grip on the lender. In April, a group of the territory’s investors threatened legal action against HSBC after the Bank of England forced UK lenders to cancel dividends due to the Covid-19 crisis. It led to repeated public apologies from HSBC’s chief executive, Noel Quinn.

This month also brought a reminder of HSBC’s troubled recent history when it was named in a journalistic investigation into banks that had notified US authorities of suspicious transactions. HSBC said the information contained in the leak was “historical” and pre-dated a settlement with the US Department of Justice in 2017. Indeed it was this leak, and not the ongoing wrangles over Hong Kong, that brought HSBC’s shares to multi-decade lows this month.

Kynaston said HSBC is clearly torn between its Hong Kong base and its need to maintain links elsewhere but that it is unlikely to make any hasty decision on whether to pull the plug on its eastern or western operations – a trait which the historian chalks up to the lender’s “stubborn streak”.

“Given that things are pretty febrile in Hong Kong, I suspect there’ll be quite a strong instinct to sort of try and ride out the storm and make placatory noises all around and, you know, hope things quieten down.”

Amid the coronavirus crisis, HSBC may have an economic justification for standing still. “We’re in an extra uncertain world at the moment. I can’t see there being much appetite for very fundamental decisions” Kynaston said.

HSBC declined to comment.
Newsletter

Related Articles

0:00
0:00
Close
UK Biotechnology Sector Receives Increased Public Funding to Support Regional Growth
Police Chiefs Update National Protest Management Guidelines Amid Rising Demonstration Activity
UK Aviation Regulator Expands Support for Regional Airports to Strengthen Domestic Routes
CMA Launches Investigation Into Retail Pricing Across UK Grocery Sector
UK Energy Operator Warns of Winter Supply Pressures Despite Stable Overall Grid Outlook
UK Research Council Expands Funding for Regional Biotechnology and Life Sciences Clusters
UK Compensation Scheme for Post Office Horizon Scandal Reaches 80 Percent Completion
Police Chiefs Issue Updated National Guidance on Managing Large Public Demonstrations
UK Expands Regional Airport Funding Scheme to Boost Domestic Connectivity
UK Competition Watchdog Launches Inquiry Into Grocery Pricing Practices
National Grid Warns of Tight Energy Management Needs During Upcoming Winter Peak Demand
UK Education Department Introduces National Standards for AI Use in Secondary Schools
UK High Court Clears North Sea Carbon Capture Project After Final Legal Challenge Fails
Northern Ireland Leaders Hold Emergency Talks on Trade Disruption Under Windsor Framework
Welsh Government Moves to Expand Social Housing in Response to Severe Affordability Pressures
UK Economy Sees Unexpected Rise in Business Investment in Second Quarter, ONS Data Shows
Scottish Government Unveils Multi-Billion Pound Investment Plan for Renewable Energy and Grid Expansion
UK and EU Agree Enhanced Defence Cooperation Pact Covering Intelligence and North Sea Security
Prime Minister Orders Independent Review of NHS Performance After Record Waiting Lists
Bank of England Holds Interest Rates at 5 Percent as Services Inflation Remains Persistent
UK Heatwave Disrupts Transport, Healthcare and Public Services as Red Weather Alerts Expand Nationwide
Barclays Warns of Growing Cyber Risk Divide Between Large UK Firms and Micro Businesses
European Defence Plans Including Ukraine Integration Prompt UK Strategic Reassessment
UK Equity Markets React as US–Iran Peace Roadmap Eases Oil Price Pressures
United Kingdom Expands Global Clean Energy Partnerships With Brazil, Morocco and Tanzania
Lord David Frost Urges Incoming UK Leadership to Abandon EU Regulatory Reset Strategy
Housing Groups Support Amendment to Strengthen Fire and Gas Safety Access Powers in Social Housing
South London NHS Estates Staff Ballot on Industrial Action Over Pay Structures in Hospital Maintenance Services
United Kingdom Government Invests £60 Million in AI Research Labs at Oxford and University College London
Barclays Cyber Security Report Highlights Rising Threat Exposure Among UK Small Businesses in AI-Driven Attacks
UK Met Office Heatwave Triggers Transport Warnings as Rail Operators Urge Cancellations Amid Infrastructure Strain
South London NHS Estates Workers Ballot for Strike Action Over Pay Disputes Across Major London Hospitals
Barclays Warns of Severe Cyber Security Gap Between Large Corporations and Small Businesses in the United Kingdom
United Kingdom Government Allocates £60 Million for Artificial Intelligence Research Laboratories at Oxford and UCL
National Health Service Approves Teplizumab Treatment to Delay Onset of Type One Diabetes in First European Rollout
Met Office Issues Rare Red Extreme Heat Warning Across London, South East and West Midlands as Transport and Health Systems Face Disruption
Prime Minister Keir Starmer Resigns After Labour Party Revolt Following Economic Stagnation and Local Election Losses
United Kingdom Economy Contracts for Second Consecutive Month as Private Sector Weakens and Job Loss Fears Rise
Taxpayer Support Grows for Higher Digital Levies on Multinational Tech Companies
Bank of England Signals Caution Over Inflation Despite Easing Energy Prices
Lloyds Banking Group Expands Artificial Intelligence Hiring Amid Sector-Wide Automation Shift
Film Producer Corporate Collapse Leaves Creditors Facing Unrecoverable Losses
UK Ten-Year Brexit Anniversary Highlights Ongoing Political and Economic Uncertainty
Nottingham Maternity Scandal Inquiry Reveals Systemic Failings in NHS Care
Met Office Heatwave Prompts Public Health Warnings Across United Kingdom
Concerns Rise Over Fiscal Stability as Political Uncertainty Weighs on UK Borrowing Costs
UK Taxpayers Back Higher Digital Taxes on Global Technology Firms, Survey Shows
Bank of England Holds Interest Rates Steady Amid Persistent Services Inflation
Reform UK and Opposition Leaders Call for General Election Following Starmer’s Departure
Ten Years After Brexit Referendum, UK Faces Ongoing Political Fragmentation and Economic Debate
×