Huawei executive Meng Wanzhou’s lawyers have accused HSBC of misrepresentations in the US’ charges against Meng, throwing the London-based bank back in the spotlight.
The role HSBC played in the case against Meng has now become the focus of public attention in the global political arena. If there is more evidence to suggest that the bank was engaged in a dangerous game of US-China tech rivalry and violated its business principles under US pressure, then Meng’s case could be a turning point for HSBC in the Chinese market.
HSBC makes most of its profits from China’s Hong Kong market, which contributed more than 80 percent of its profits during the first quarter of 2020, according to its quarterly report. Nevertheless, the bank is also highly integrated into the global financial system dominated by the US and has been reportedly subject to US supervision due to “past misconduct.” HSBC is in its current passive situation due to intertwined interests with the Chinese market and US financial hegemony.
Even if US Secretary of State Mike Pompeo meets his Chinese counterpart, a meeting that is expected to ease tensions between the two countries, it won’t change the nature of HSBC’s awkward position. Whatever the outcome of the meeting, it is essential for the bank to think about its stance and set itself on a development path in line with that position.
HSBC needs to be aware of the potential impact of its choice and be prepared for it. With Meng’s case proceeding, more details and evidence will be known by the public. If it turns out that HSBC has been cooperating with the US in Meng’s case, it would be understandable that its image would bear an indelible stain and likely that its Chinese business would take a hit. Given its reliance on Chinese profits, it will be a life-or-death test for HSBC. And whether or not the bank can overcome its dilemma will really test the political wisdom of its management.
We don’t want to see such a big bank hit hard for political reasons, but companies need to pay for the choices they have made.