Albert Cheng

Opinion | Beijing’s attack on HSBC is a blow to Hongkongers, but all is not lost

In addition to regulatory hurdles and, more recently, the pandemic, HSBC has been caught up in the US-China tussle. Rumours that the bank may be placed on China’s ‘unreliable entity list’ have done the bank’s stock and its many local investors no favours

HSBC can turn the tide by moving its headquarters to Hong Kong, shaving off non-performing assets and focusing on Asia-Pacific

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Hongkongers wait for a tram in front of a HSBC advertisement in Central on September 28. Photo: Nora Tam

Albert Cheng

Published: 8:45am, 2 Oct 2020Updated: 9:01am, 2 Oct 2020

HSBC shares have plunged to a record low, falling below the HK$28 per share price during its rights issue during the global financial crisis. While shareholders grieve, for many Hongkongers, the stock’s recent decline indicates the end of the Hong Kong-bred bank’s heydey.

Both the global and local political climate have played a role in HSBC’s downfall. After the 2008 financial crisis, HSBC, which once went global with the vision of being “the world’s local bank”, met its Waterloo in the United States and Europe.

Following the Covid-19 outbreak in March, the US and European Union have tried to boost their economies with monetary easing. The zero-to-negative interest rate policy has severely hurt the profits of the banking sector.

In addition, after moving its headquarters to London, HSBC has had to adhere to the Bank of England’s policies. To offset the financial burden caused by the rapid increase of non-performing loans, banks must retain capital. The Bank of England’s instruction to British financial institutions to suspend dividend payments has put HSBC’s stock price under pressure.

Since the financial crises and the September 11 attacks, Western countries have tightened regulation of the banking sector. HSBC had to separate its investment and retail banking businesses, and also paid billions of dollars to the US regulators to settle money laundering and tax evasion cases.

02:05

HSBC sees second-quarter profits plunge by 82 per cent thanks to coronavirus

Today, Hong Kong is caught in the middle of escalating US-China tensions. Given that HSBC is an iconic symbol of Hong Kong as an international financial centre, the bank was unlikely to remain unscathed.