FirstFT: Chinese HSBC Group Establishes Communist Party Committee

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HSBC becomes first foreign lender set up a committee of the Chinese Communist Party in its investment banking subsidiary in the country, which will force Western competitors based in China to follow suit.

The lender’s Chinese investment bank, HSBC Qianhai Securities, recently set up a CCP committee, two people familiar with the decision said. The move comes after HSBC increased its stake in the joint venture, which launched in 2015, to 90% from 51% in April.

The CPC Committee, which may consist of several branches, is required by Chinese company law but has not yet been widely adopted among foreign financial groups. It usually consists of three or more employees who are also members of the Chinese Communist Party.

HSBC’s actions will force other foreign banks to do the same. Some of them have been considering whether they are required to do so after taking full ownership of their securities on the mainland and brokering over the past two years, according to several senior figures at these institutions.

Seven global banks control investment banking operations in mainland China – HSBC, Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank – however, only HSBC has created a CCP committee, according to several people familiar with the matter. . Other banks declined to comment.

US bank executives are particularly concerned that strategic decisions and customer data could be exposed by the CCP, several of them have reported to the Financial Times.

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