HSBC defends oilsands ‘boycott’

European bank giant vows to maintain presence in Alberta after Kenney attacks

GEOFFREY MORGAN

CALGARY HSBC Holdings Plc says it remains committed to Alberta despite the province’s incoming premier’s scathing attack on the bank and his pledge that the new government won’t conduct business with Europe’s largest bank until it changes its energy lending policies.

Several Canadian oilsands companies reacted angrily when HSBC, and by extension its Canadian unit HSBC Bank Canada, outlined a new policy in June of last year to stop offering financial services to new oilsands projects or new pipelines connected to the oilsands. More recently, the bank has faced sharp criticism from premier-designate Jason Kenney, who called it hypocritical for its willingness to do business with Saudi Arabia, a major oil producer with a horrific track record on human rights.

“When multinational companies like HSBC boycott Alberta, we’ll boycott them,” Kenney said in his victory speech this month after his United Conservative Party won 63 seats in Alberta’s 87-seat legislature.

Kenney’s office didn’t respond to a request for comment on how the new government would boycott HSBC. But HSBC says it has every intention of maintaining a presence in the province and said its lending policy has been mischaracterized as a “boycott.”

“I want to be absolutely clear — we have not and are not ‘boycotting’ anyone. HSBC is a longtime supporter of Alberta and the energy sector. That has not changed,” said Sharon Wilks, HSBC Bank Canada’s spokesperson.

Wilks would not say how HSBC intended to approach or work with the province’s new government but reiterated that the bank has been in Alberta for 30 years and wouldn’t leave.

She said the bank operates in 17 locations in Alberta, employs 330 people there and last year paid $8.9 million in corporate taxes in the province.

It has lent $14.4 billion to 1,462 businesses across the province, including the energy sector.

“Every time the industry has faced a downturn, we showed our personal commitment to help our customers weather the storm — and we are still here, continuing to do that,” Wilks said. She added that HSBC is a “leading bank for oilfield services companies” and would continue to invest in the province.

A senior banking executive in Calgary, who spoke on condition of anonymity due to his banking relationship with HSBC, said the bank’s exposure to the upstream oil and gas sector in the province is limited but it is “a meaningful lender” to oilfield services and energy-related manufacturing businesses.

Another senior banking executive, who previously worked for HSBC in Alberta, said the local employees at the bank “cringed” when Kenney criticized HSBC during his victory speech and now find themselves in a difficult position as they try to maintain client relationships despite an unpopular policy imposed by HSBC’s head office.

They noted that HSBC has previously had a stronger relationship with the domestic energy sector, especially when former Encana Corp. CEO Gwyn Morgan was HSBC Canada’s lead director.

HSBC also has a large business in Alberta’s real estate sector and with businesses outside of the energy sector, both bankers said. Still, the energy lending policy was not a popular one in the province’s oil and gas industry, the province’s dominant sector.

Canada’s largest oil company Suncor Energy Inc. said in August it would “completely sever” its relationship with HSBC after the bank finalized its lending policy and would not work with the bank at its non-oilsands assets at offshore operations in Eastern Canada, the U.K. and Norway.

HSBC is not the only bank that has stopped funding new oilsands projects. A number of French financial services groups including BNP Paribas S.A., Societe Generale S.A., Natixis and Credit Agricole Group pledged to stop financing oilsands developments in recent years.

Data from the Fossil Fuel Finance Report Card 2019, which is compiled by green activist organizations including Oil Change International, show that HSBC’s financing activity in the oilsands sector declined 87 per cent last year.

We ... are not ‘ boycotting’ anyone. HSBC is a longtime supporter of Alberta and the energy sector.