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HSBC Shares Fall to 25-Year Low on China Fears, Banks Report (3)
2020-09-21 07:19:08.491 GMT
By Alfred Liu
(Bloomberg) -- HSBC Holdings Plc slumped below its financial crisis low set more than a decade ago as pressures mount on several fronts, including a potential threat to its China expansion plans and increased scrutiny of money laundering controls.
The London-based bank’s Hong Kong shares on Monday slid
below their closing low for March 2009, hitting as low as
HK$29.60. They have plunged 51% this year, reaching the lowest
since 1995. In London, HSBC fell 3.3% as of 8:05 a.m. local
time, compared with the 1.7% decline in the benchmark FTSE 100
Index.
Europe’s largest bank is a possible candidate for China’s
“unreliable entity list” that aims to punish firms,
organizations or individuals that damage national security, the
Communist Party’s Global Times newspaper reported Saturday. A
day later, HSBC was among global banks named in a report by the
International Consortium of Investigative Journalists on lenders
that “kept profiting from powerful and dangerous players” in the
past two decades even after the U.S. imposed penalties on the
institutions.
“If the company is listed as a unreliable company by China,
which looks certain since it’s a Global Times article, the bank
will be facing lots of difficulties to do business in China,”
Banny Lam, head of research at CEB International Investment
Corp., said by phone Monday. “They may have trouble expanding
the mainland business, after investing so much there over the
past few years.”
The bank has rankled China over its participation in the
American investigation of Huawei Technologies Co. Penalties
include restrictions on trade, investments and visas on
companies, countries, groups or persons that appear on the list.
HSBC declined to comment on the Global Times article. In a
statement Monday in response to the ICIJ report it said that
“starting in 2012, HSBC embarked on amulti-year journey to
overhaul its ability to combat financial crime across more than
60 jurisdictions. HSBC is a much safer institution than it was
in 2012.”
Standard Chartered Plc, which was also mentioned in the
ICIJ report, declined as much as 5.9% in Hong Kong and 5.1% in
London. “We take our responsibility to fight financial crime
extremely seriously and have invested substantially in our
compliance programs,” the bank said Monday in a statement.
Read more: U.S. imposes sanctions on H.K. officials
HSBC now risks being caught in deepening turmoil after a
swirl of trouble over the past year amid political unrest and an
economic slump in its biggest market, Hong Kong. It also faces
difficulties in navigating low interest rates and surging loan
losses sparked by the global pandemic.
HSBC Chief Executive Officer Noel Quinn, who took over as
the bank’s permanent head in March, last month issued a stark
warning about tough times ahead while reporting that first-half
profit halved and predicting loan losses could swell to $13
billion this year. Quinn said the bank would attempt to hasten a
shakeup of its global operations, accelerating a further pivot
into Asia as its European operations lose money.
Read more on HSBC’s grim outlook
Struggling to boost returns, the lender has come under fire
both in the West and in China as it attempts to steer through
political tension. HSBC was lambasted in the U.S. and the U.K.
over its support for China’s new security legislation on Hong
Kong.
A jump in income from its markets business has failed to
make up for broader shortcomings, unlike at some Wall Street and
European competitors. HSBC stock has fallen more steeply than
most big rivals this year, with Citigroup Inc. and JPMorgan
Chase & Co. posting declines of 44% and 29%, respectively.
To make matters worse, HSBC sparked anger in Hong Kong
earlier this year, alienating some of its most loyal investors,
after scrapping its dividend in response to the pandemic. The
bank is the worst performer on the benchmark Hang Seng index so
far this year.
Read more: HSBC shocks investors in Hong Kong
--With assistance from Jeanny Yu.
To contact the reporter on this story:
Alfred Liu in Hong Kong at
aliu226@bloomberg.netTo contact the editors responsible for this story:
Candice Zachariahs at
czachariahs2@bloomberg.netJonas Bergman, Jun Luo
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