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(Sept. 21): HSBC Holdings Plc fell below its financial crisis trough set more than a decade ago as pressures mount on several fronts, including a potential threat to its expansion plans in China and increased scrutiny of money laundering controls.
The London-based bank’s Hong Kong shares fell below their March 2009 closing low on Monday, reaching just HK $ 29.60. They have plummeted 51% this year, reaching the lowest level since 1995. In London, HSBC fell 3.3% at 8:05 am local time, compared with a 1.7% drop in the index. reference FTSE 100.
Europe’s largest bank is a possible candidate for China’s “list of untrustworthy entities” that aims to punish companies, organizations or individuals that harm national security, the Communist Party’s Global Times newspaper reported on Saturday. A day later, HSBC was among the global banks named in a report by the International Consortium of Investigative Journalists about lenders who “continued to profit from powerful and dangerous players” over the past two decades, even after the United States imposed sanctions on the institutions. .
“If the company is listed in China as an unreliable company, which seems certain since it is a Global Times article, the bank will face a lot of difficulties doing business in China,” Banny Lam, Head of Research at CEB International Investment Corp said by phone on Monday. “They may have trouble expanding the mainland business, after investing so much there in recent years.”
The bank has irritated China over its participation in the US investigation of Huawei Technologies Co. The sanctions include restrictions on trade, investment and visas to companies, countries, groups or individuals 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 “beginning in 2012, HSBC embarked on a multi-year journey to review its ability to combat financial crime in more than 60 jurisdictions. HSBC is a much more secure institution than it was in 2012. “
Standard Chartered Plc, which was also mentioned in the ICIJ report, decreased as much as 5.9% in Hong Kong and 5.1% in London. “We take our responsibility to combat financial crime very seriously and have invested substantially in our compliance programs,” the bank said in a statement Monday.
HSBC is now at risk of being caught up in deepening turmoil after a whirlwind of troubles over the past year amid political unrest and an economic recession in its largest market, Hong Kong. It also faces difficulties navigating low interest rates and rising credit losses caused by the global pandemic.
HSBC CEO Noel Quinn, who took over as the bank’s permanent director in March, last month issued a stern warning about tough times ahead as he reported that first-half earnings were cut in half and forecast that the Credit losses could rise to $ 13 billion this year. Quinn said the bank would try to accelerate a reorganization of its global operations, accelerating a further turn in Asia as its European operations lose money.
In his fight to boost yields, the lender has come under fire from both the West and China as he tries to overcome political tension. HSBC was criticized in the US and the UK for its support of China’s new security legislation in Hong Kong.
An increase in revenue from its markets business has been unable to make up for the broader shortcomings, unlike some European and Wall Street competitors. HSBC shares have fallen more steeply than most of the 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 eliminating its dividend in response to the pandemic. The bank has the worst performance on the Hang Seng benchmark so far this year.
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