HSBC kicks off the year by closing branches in Hong Kong

HSBC kicks off the year by closing branches in Hong KongHSBC kicks off the year by closing branches in Hong Kong

HSBC is embroiled in political unrest in Hong Kong. Demonstrators attack bank branches and paint graffiti on the famous pair of lions that guard its downtown headquarters.

Hong Kong is the bank’s most important market, accounting for just over half of its $ 12.5 billion pre-tax profit in the first half of 2019, although with protests leading the Hong Kong economy into recession, HSBC and its "colleagues" the market is facing a strong financial blow.

So far, HSBC has largely avoided direct involvement in the often violent anti-government protests that rocked Hong Kong for more than six months, even as other companies allegedly linked to Beijing have been vandalized, including Bank of China (Hong Kong ), the second largest bank in Hong Kong after HSBC.

But recently, HSBC has angered some protesters, who accuse him of taking part in government action against activists trying to raise money to support their protests..

Protesters link the bank‘s November closure of an account belonging to the Spark Alliance group, which helps pay protesters’ legal fees, to the December arrest of four Spark Alliance members on money laundering charges.

HSBC strongly denies any connection.

«People get angry because they feel HSBC has stopped giving money to protesters», – one of the protesters spoke out on Wednesday about the decision to close the account as he stood in a group that photographed damaged lions.

HSBC said in a statement after the arrest that the decision to close the account was «in accordance with international regulatory standards».

«Our decision has nothing to do with the arrest of four people by the Hong Kong police on December 19, 2019. We closed the account in November 2019 by direct order of the client», – the bank said.

Two HSBC branches and seven domestic ATMs closed on the first business day of the year.

Some had their windows smashed and painted on their walls during the New Year’s anti-government protest march «support Spark Alliance». Others were damaged during the Christmas Eve protests.

Two lions were covered with graffiti and briefly lit after being doused with flammable liquid.

More than 90% of the $ 4.4 billion received by HSBC’s retail banking and asset management division in the six months at the end of June last year came from Hong Kong.

HSBC has also placed billions of dollars in southern China in the Pearl River Delta adjacent to Hong Kong and expanded its services to the world‘s second largest economy..

Beijing plans to merge the Pearl River Delta, Hong Kong and Macau to create an economic hub as part of its initiative «Great Bay Area».

HSBC’s involvement in protests underscores the fact that companies have had to tread the edge of the abyss since protests began in June in response to an already withdrawn bill that would allow extradition to mainland China, where the courts are controlled by the Communist Party..

Other Hong Kong companies have suffered from perceived pro-protests.

Beijing-based Cathay Pacific Airways was forced to suspend protest workers, and chief executive Rupert Hogg and his chief deputy resigned in August following riots.

HSBC has previously been targeted by Beijing supporters. Last year, users of the Chinese social media platform Weibo shared screenshots of HSBC employee posts on Facebook supporting the protests. Posts urged readers to complain to HSBC management.

«Companies now have to think about how three different groups will react to their decisions: the Chinese government, the Hong Kong protesters, and the Chinese consumers.», – said Kent Kedl, head of Control Risks Greater China.