Chinese banks race to limit damage ahead of US sanctions
CHINA’S banks are racing to put contingency plans in place for US sanctions that could punish lenders for doing business with officials involved in Beijing’s crackdown in Hong Kong.
Sources at a number of Chinese state financial institutions told Reuters yesterday that they were looking at the possibility of being cut off from US dollars and were putting contingency plans in place.
One source said a worst-case scenario would be a run on branches in Hong Kong if customers feared Chinese banks could run out of US dollars.
The plans come a week after the US Senate and House of Representatives passed a bill which means foreign banks could be handed multimillionpound fines for doing business with certain Chinese officials.
The bill still needs to be signed into law by Donald Trump and it is not yet
‘HSBC and Standard Chartered gave their backing to the law when it was proposed last month’
known which individuals will be included. The rule is a response to the security law being imposed on Hong Kong by Beijing which criminalises anti-government movements and introduces life sentences or long-term jail terms for vaguely defined national security crimes.
HSBC and Standard Chartered gave their backing to the law when it was first proposed by China’s communist regime last month, sparking condemnation from Western leaders, human rights campaigners and activists.
Lisa Nandy, the shadow foreign secretary, told The Daily Telegraph the two London-listed banks now had a “particular responsibility” to safeguard staff in the former British territory.
After the first arrests were made under the rules last week, Dominic Raab, the Foreign Secretary, also launched a fresh broadside against HSBC over its support for the law, arguing that people in Hong Kong “should not be sacrificed on the altar of bankers’ bonuses”.
US sanctions could pose a severe headache for British lenders such as HSBC, Standard Chartered and Barclays by forcing them to comb through client databases to ensure they are not breaking the rules.
They will also likely concern companies such as Credit Suisse and UBS, which have vigorously courted rich Asian clients as part of a push into wealth management.