Global bank HSBC said on Thursday that staff in its China securities unit have set up a Communist Party committee.
While such news might send a shudder down the spine of many Western businesses, the London-based bank – which has about 7,000 staff on the mainland – sought to play down the development.
HSBC Holdings said the party branch was set up within HSBC Qianhai Securities, its securities brokerage unit in the country.
It said such branches “are common and can be set up by as few as three employees,” and that they had no influence on the business, nor any formal role in its day-to-day activities.
The statement followed a report in the Financial Times citing two people familiar with the matter, who said the panel acts as a trade union and gives the ruling party access to management.
A party committee is standard in most medium to large-sized companies in China, but rare for foreign entities. HSBC is believed to be the first foreign lender to have such a panel.
The move came amid pressure from Chinese stakeholder Ping An to break up the group into eastern and western units, which occurred after the lender raised its stake in HSBC Qianhai Securities to 90% from 51%.
HSBC is one of seven global banks with investment operations in mainland China. The others are Goldman Sachs, JPMorgan, Morgan Stanley, UBS, Deutsche Bank and Credit Suisse.
Some of the other foreign banks have employed senior party members to help their businesses on the mainland.
- Reuters with additional editing by George Russell and Jim Pollard.