Chinese Communist Party representatives have likely always been in place at all key banks, including Swiss ones. The question now is whether they need full committees.

HSBC’s recent establishment of a Chinese Communist Party Committee, as reported by the «Financial Times» (behind paywall) on Thursday, is just another sign of the uneasy, pragmatic truce between foreign banks and the mainland government that has held in place for years, if not decades.

Although few western banks with onshore businesses in China are likely to directly comment on today’s article, as the «FT» apparently indicates, the likelihood is that they have always had at least one representative from the Communist Party working for them on the ground in some capacity or another.

These representatives don’t usually have a governance or management role and are usually there to coordinate employee activities and other things of a similar nature, as indicated in the «China Business Review».

Geopolitics Intervenes

The question of whether to install a committee or not, as HSBC ostensibly has done, in all likelihood only arises now given the new rules recently been put in place.

As part of the first phase trade deal between the US and China, foreign institutions were allowed majority control of their businesses in 2020, a date that was earlier than had been originally foreseen, something that finews.asia reported on previously.

That was also probably the case for HSBC Qianhai Securities, which increased its stake in its joint venture to 90 percent this year, after owning a little more than half of it before it. And that by itself may have been a key factor in their decision to establish a committee.

Upping the Stakes

UBS and Credit Suisse are likely to be faced with similar quandaries soon, if they have not faced them already, given they have been progressively increasing their stakes in their onshore businesses in China in recent years.

As UBS confirmed to finews.asia in April, its ownership in its onshore securities venture has increased to 67 percent. Credit Suisse, for its part, confirmed it had become a majority shareholder of its security venture in 2020.

Neither Credit Suisse nor UBS replied to a request asking for confirmation that they had representatives from the Chinese Communist Party within their Chinese organizations.