By Lawrence White and Anshuman Daga
LONDON -HSBC Holdings said employees who form branches of the Chinese Communist Party (CCP) within private companies in China have ‘no influence’ on the running of the business, following media reports on Thursday that such a unit had been established at its China securities unit.
HSBC did not directly comment on whether such a branch had been established, but said they “are common and can be set up by as few as three employees,” and that they had no influence on the business nor formal role in its day-to-day activities.
The statement followed a report in the Financial Times citing two people familiar with the matter as saying that HSBC had installed a Chinese Communist Party committee (CCP) within the business. (https://on.ft.com/3RP55dG)
A CCP committee is required by Chinese companies law but not yet widely enforced among foreign finance groups, according to the report.
The committees serve a dual purpose as a workers’ union and the means by which a party representative is installed within a company’s top ranks, sometimes in a director or management role.
HSBC said that management had no part in establishing the branch formed by its employees, and that the branch would have “no formal role in the day to day activities of the business.”
HSBC did not give details on the number of its staff who were members of any such branch, but did say it did not track the political affiliations of its workforce.
The London-headquartered bank raised its stake in the China brokerage joint venture to 90% from 51% in April.
In April, Ping An Insurance Group Co of China Ltd called on HSBC to explore strategic options such as spinning off its mainstay Asian business to unlock greater shareholder value.
In response, HSBC hired advisers including London-based investment bank Robey Warshaw to assist on a review of its strategy but has not yet directly commented on Ping An’s demands.
The FT said HSBC’s move for its Chinese securities brokerage unit would pressure other foreign banks in China to follow suit.
Some have been examining whether they are required to do so after taking full ownership of their mainland securities and brokerage operations in the last two years, the FT added, citing many senior people at those institutions.
(Reporting by Lawrence White and Anshuman DagaEditing by Sinead Cruise and Mark Potter)
