Britain’s biggest lender and Asia-focused HSBC has set up a Chinese Communist Party (CCP) cadre in its China investment bank.
The bank has become the first outside China to install a CCP committee, according to reports today in the Financial Times.
Chinese law enforces domestic finance firms to have party officials in positions of authority. The committees typically act as a workers’ union.
Until now, Beijing has not wholly enforced the requirement on foreign banks operating in the country.
Some of the world’s top banking firms, including JP Morgan, Goldman Sachs and Deutsche Bank have a presence in China.
HSBC’s move could put it in a difficult position if tensions between China and the west escalate.
The bank has a strong presence in Asia, especially in Hong Kong, where it makes most of its profits.
A source close to former chancellor and Tory leadership hopeful Rishi Sunak told City A.M. he “is firm on the need to ensure that economic engagement with China doesn’t compromise national security.”
“We have systems in place to deal with national security threats where they arise,” they added.
A HSBC spokesperson told City A.M.: “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,” they added.