HSBC installs a CCP committee within its China subsidiary, sources say
HSBC is headquartered in London but makes most of its money in Hong Kong and has aggressive expansion plans in mainland China. In April this year, the European bank increased its stake in its China securities brokerage joint venture with Chinese state partner Qianhai Financial Holdings from 51% to 90%. The thing is, there is a Chinese law that requires companies to have a CCP committee, which typically consists of around three or more people who are also in the Chinese government to serve as both a workers’ union and in some high-ranking management positions within the company. This law hasn’t really been enforced for foreign companies.
Now, though, according to the Financial Times, people close to the situation said that HSBC has recently established a CCP committee, which could pressure other foreign banks in the region to do the same, such as JP Morgan, Morgan Stanley and UBS. After the report circulated Thursday, HSBC released a statement saying that employees who form branches of the CCP within private companies in China have ‘no influence’ on business operations.
“It is significant in the sense of where [HSBC] is allocating its future," said one of the sources who spoke with Financial Times. “It is increasing its ties with an autocracy that clearly has views on how far it wants to reach into private companies. It is another brick in that wall."
“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," said HSBC in an emailed statement. “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."