HK laws snare foreign banks

International banks in Hong Kong are caught in the crossfire of competing laws enacted by the United States and China as the superpowers clash over the city's future, with analysts warning businesses are being forced to pick a side.

Lawyers working for the lenders have been busy. Their clients have grown increasingly alarmed by two pieces of legislation that came into effect last month that could radically alter how they do business in the semi-autonomous city.

The first is a bipartisan US Bill sanctioning Chinese and Hong Kong officials responsible for the current crackdown on political freedoms in the city.

The second is a sweeping security law Beijing imposed on the finance hub that includes a ban on businesses complying with foreign sanctions.

That has left banks scratching their heads - how can they follow one law without breaching the other? "We are very worried," one banker with a major organization told Agence France-Presse (AFP), asking to remain anonymous to speak freely.

The biggest concern was Beijing's track record of punishing businesses deemed to step out of line, with the security law giving it powerful new ammunition.

"Most people in Hong Kong, especially in the banking industry, do worry that the ... national security law is very vague and it can easily be interpreted to whatever agenda the government has," he added.

Steve Tsang, director of the China Institute at London's SOAS university, said businesses were only beginning to digest the predicament they face. "It is a real issue and it applies not only to foreign banks but to all banks, companies, and international NGOs in Hong Kong," he told AFP.