HSBC unit installs Chinese Communist Party committee
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HSBC unit installs Chinese Communist Party committee

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his file photo taken on August 2, 2021 shows pedestrians walking past a local branch of HSBC bank in Hong Kong - ISAAC LAWRENCE/ AFP
his file photo taken on August 2, 2021 shows pedestrians walking past a local branch of HSBC bank in Hong Kong - ISAAC LAWRENCE/ AFP

HSBC has installed a Chinese Communist Party (CCP) committee for workers in its investment banking unit in the country amid escalating tensions between Beijing and the West.

The bank's subsidiary HSBC Qianhai Securities was set up in 2015 to drive expansion across mainland China and in April the lender raised its stake in the joint venture to 90pc, up from 51pc.

Under Chinese law, companies are required to have CCP committees with three or more employees who are also members of the Chinese Communist party appointed to roles.

They function like a workers' union but are also a way of installing a party representative within a company's top ranks, sometimes in a director or management role.

HSBC is believed to be the first foreign finance group to have a CCP committee, in a move likely to have a ripple effect across the financial services industry.

Qianhai provides a range of services, from running initial public offerings to securities trading, and dwarfs its foreign competitors for size, with 7,000 staff based on the mainland.

HSBC is almost unique in its reliance on Asian markets. As a result, the bank has increasingly found itself in the crosshairs of an escalating geopolitical rivalry between China and the West. While HSBC is headquartered in London, it makes 90pc of its profit in Asia, with China and Hong Kong offering the greatest opportunities for future growth.

Earlier this year, the bank’s biggest investor, the state-run Chinese insurer Ping An, called for HSBC to be split into eastern and western units, arguing that it would be impossible to straddle both regions in the coming years.

Seven global banks have investment banking operations in mainland China, including HSBC, Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank.

Executives at these banks are said to be worried about the optics of potentially exposing strategic decisions and client data to the CCP, according to The Financial Times, which first reported the story citing two people familiar with the decision at HSBC.

While it is not uncommon for banks to hire state officials in senior positions, financial institutions have stopped short of giving Beijing a firm hand in running their businesses.

One head of Asia at an international bank told the paper: “There was an internal email that said we might need to do something, but for the time being... it is not yet compulsory.”

HSBC said: “Employees of private firms in China are able to form a Party branch.  These branches are common and can be set up by as few as three employees.

“It is important to note that management has no role in establishing such groups, they do not influence the direction of the business, and have no formal role in the day to day activities of the business. HSBC does not track the political affiliation of its employees.”