Shares of HSBC Holdings PLC, which draws more than two-thirds of its pretax income from Hong Kong, yesterday slumped as advisers to US President Donald Trump were said to be discussing a move to punish banks in the territory and destabilize the local currency peg to the US dollar.
HSBC was named as a potential target, Bloomberg News reported, citing people familiar with the matter.
US Secretary of State Mike Pompeo last month singled out the bank’s Asia-Pacific chief executive officer Peter Wong (王冬勝) for signing a petition supporting “Beijing’s disastrous decision to destroy Hong Kong’s autonomy.”
Photo: AP
HSBC shares fell more than 4 percent in Hong Kong, the most in more than three weeks, making it the biggest drag on the benchmark Hang Seng Index.
The bank’s shares fell 3.5 percent in London early trading, extending this year’s loss to 36 percent.
A Hong Kong-based spokeswoman declined to comment on the US report.
“Disruption to the currency peg and dollar funding, with HSBC reporting in US dollars, could erode revenue and accelerate material changes in its dual listing and structure,” Bloomberg Intelligence analysts Jonathan Tyce and Francis Chan (陳永富) wrote yesterday.
London-based HSBC last month announced that it would revive a massive cost-reduction plan that had been put on hold due to the COVID-19 pandemic.
The plan, which includes cutting 35,000 jobs globally, is part of a move by HSBC to pivot more of its business to Asia. The bank has also planned to shrink US retail, French and non-ring-fenced UK exposure.
In a statement on WeChat (微信) last month, the bank pledged to continue to invest and support the Chinese economy after speculation in local media that its massive restructuring plan would mean an exit from China.
Some top advisers to Trump want the US to undermine the Hong Kong dollar’s peg to the US dollar to punish China for moves to chip away at Hong Kong’s political freedoms, people familiar with the matter said.
However, the proposal has not been elevated to the senior levels of the White House, and faces strong opposition from others in the administration who worry that such a move would only hurt Hong Kong banks and the US, not China, the people said.
The US clearing license is vital to HSBC’s global operations and the bank is one of the largest international lenders operating in the US.
HSBC has hired James Forese, a former senior executive at Citigroup Inc, to its board as it looks to revamp its global business, including its underperforming US unit.
HSBC is also the largest note-issuing bank in Hong Kong, putting it at more risk than Standard Chartered PLC and BOC Hong Kong Holdings Ltd (中銀香港) should the US limit their ability to buy US dollars.
HSBC shares were down 4.3 percent at the end of trading in Hong Kong yesterday. Standard Chartered fell 3.5 percent and BOC Hong Kong lost 1.4 percent.
Additional reporting by staff writer
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