Chi­nese banks race to limit dam­age ahead of US sanc­tions

The Daily Telegraph - Business - - Business - By Lucy Bur­ton

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.

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