HSBC has become the first foreign lender in China to set up a Chinese Communist Party committee in an in-country investment banking venture, the Financial Times reported Thursday.
HSBC Qianhai Securities installed a CCP committee after HSBC’s stake in the joint venture increased from 51 to 90 percent, the FT said, citing two people familiar with the decision.
Chinese law requires every company to set up its own CCP committee but the rule is “not yet widely enforced” among foreign banks, the newspaper added.
Such committees can place party representatives at a company’s managerial level, but people close to HSBC told the FT that the committee in question would not have any management role.
HSBC did not immediately respond to AFP’s request for comment.
Senior employees at foreign banks warned that HSBC’s move will pressure competitors to follow suit and some have been looking into the option, the FT reported.
Last year, HSBC announced it would embark on a multi-year strategic pivot to Asia and the Middle East, with ambitions to lead Asia’s wealth management market.
The bank said it would invest US$6 billion in Hong Kong, China and Singapore and hire more than 5,000 wealth advisors — while slashing 35,000 jobs and cutting its retail operations in the United States and France.
HSBC has around 7,000 staff in mainland China, according to the FT.
The bank has been caught in ongoing geopolitical tensions between China and the West in recent years, coming under pressure from both sides.
British and American politicians have criticised the bank for complying with Hong Kong’s controversial national security law, including freezing the accounts of activists.
Separately, the bank drew flak from Beijing for providing information to US prosecutors that led to the arrest of Huawei executive Meng Wanzhou in 2018.
In April, HSBC’s largest shareholder Ping An Insurance Group called for the bank to split off its Asian operations, noting the difficulty of balancing between east and west.
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