HSBC swept into Hong Kong turmoil as ex-lawmaker's accounts frozen

HSBC is also in the midst of a massive restructuring, making a pivot to mainland China and Asia, away from Europe and the US.
HSBC is also in the midst of a massive restructuring, making a pivot to mainland China and Asia, away from Europe and the US.PHOTO: AFP

HONG KONG (BLOOMBERG) - HSBC Holdings has once again found itself in the middle of the debate over Hong Kong's political future after a former pro-democracy lawmaker, who has fled into self-imposed exile, accused the bank of freezing accounts he and his family held.

Former lawmaker Ted Hui, who fled to the UK amid a police investigation in Hong Kong, said over the weekend that the British bank and other local lenders had frozen his and his family's accounts in the Asian financial hub.

His family was able to transfer out their savings after the accounts were "suddenly unfrozen", he said in a Facebook post later.

Local media reported on Monday (Dec 7) that the police had ordered HSBC to again block accounts belonging to Hui, his parents and his wife.

Hui called the incident "extremely serious" in one of his posts as it impacted not just his family but the confidence of HSBC's customers everywhere.

China's imposition of controversial new security measures has eroded faith in the city's banking system, he wrote.

In a statement that didn't name Hui, Hong Kong police said bank accounts related to a case that involves a person "who had absconded overseas" were frozen as part of an investigation into money laundering and suspected violations of the city's national security law, including "collusion with foreign forces".

It's the latest Hong Kong development to embroil HSBC in the complicated geopolitics of the former British colony, where local pro-democracy politicians have been disqualified, charged, arrested and fled into exile amid a broader China-backed crackdown on the political opposition.

China's actions have also drawn a slate of sanctions from Washington, dragging global banks into the political back-and-forth at a time when they have big expansion plans for Asia's largest economy.

The tensions have forced London-based HSBC, which derives more than a third of its revenue from Hong Kong, into a precarious balancing act as its seeks to avoid drawing the ire of clients in the city and politicians on both sides.

The lender is also in the midst of a massive restructuring, making a pivot to mainland China and Asia, away from unprofitable markets in Europe and the US.

"We have to abide by the laws of the jurisdiction in which we operate," a Hong Kong-based spokesman for HSBC said.

"While we are unable to comment on matters concerning specific account activity, we are disappointed to see the circumstances being misrepresented."

The bank's shares slid 1.8 per cent to HK$42.95 as at 3.09pm in Hong Kong and are down 29 per cent this year.

The lender has previously been criticised as the city was engulfed by sometimes-violent protests in 2019.

It became a target of protesters' anger after closing an account linked to the city's pro-democracy movement in November last year.

Two historic bronze lions outside of the bank's main towering Hong Kong headquarters were defaced as part of the protests.

HSBC also prompted a wave of criticism from British and US politicians after the bank's Asia chief, Mr Peter Wong, signed a petition in support of the controversial China-drafted national security law that was imposed by Beijing on Hong Kong over the summer.

Foreign governments led by the US and UK have criticised the sweeping new security measures, which target political crimes in addition to terrorism, for eroding the unique freedoms Beijing promised to protect when the city returned to Chinese rule in 1997.

Extremely serious

"I think the incident is extremely serious. It reflects that banks can arbitrarily freeze citizens' assets due to political pressure under the National Security Law, severely impacting the credibility of Hong Kong's banking and financial system," Hui wrote.

He urged local and international regulatory agencies to investigate the incident and "severely punish law enforcement officers and bank managers who abuse their power".

Hang Seng, part of the HSBC Group, and Bank of China were named as Hui's other banks in a South China Morning Post (SCMP) report.

Mr Logo Lo, a spokesman with Hang Seng, said the bank doesn't comment on details of individual accounts.

Bank of China declined to immediately comment.

Five accounts belonging to Hui, his wife and parents had been inaccessible since Saturday, he had said in an interview with the SCMP.

Hui said he discovered the problem when he logged into his online bank accounts, which weren't functioning, the Post reported.

The accounts contain his family's "life savings", Hui said in the interview.

When he contacted the banks, Hui was told that they could provide no further information, the report quoted him as saying.

Hui announced last week that he was going into exile in the UK after fleeing to Denmark earlier.

He was one of a group of people arrested last month in connection with a protest in the legislative chamber in May.

Hui quit in November as part of a mass resignation by opposition legislators over the government's ouster of four of their members.

The US, which has already sanctioned Hong Kong Chief Executive Carrie Lam and several other officials responsible for the city, has a mid-December deadline to identify banks for penalties under a law passed earlier this year to support the local democracy movement.

Banks, including Citigroup and Standard Chartered, have stepped up scrutiny of banking clients in Hong Kong, aimed to avoid violating US sanctions on officials in the former British colony.

Washington is preparing to sanction at least a dozen more Chinese officials over their role in the recent disqualification of Hong Kong legislators, people familiar have said.

Secretary of State Michael Pompeo last week accused Hong Kong of using the courts to engage in "political persecution".