HSBC and Standard Chartered are bracing for a renewed US sanctions assault on China, amid official concern that escalating diplomatic tensions threaten collateral damage in the City.
They are working on contingency plans for a worst-case scenario in which the political and trade disputes between Washington and Beijing trigger restrictions on banks serving Chinese companies and individuals, known as secondary sanctions.
Sources close to the discussions told The Sunday Telegraph that HSBC and Standard Chartered were exploring how they might cope with potentially extreme measures from Donald Trump, including being effectively cut off from the US financial system. Specialist lawyers and regulatory experts said the banks needed to consider how they could operate without using the dollar.
Executives and City authorities are said to believe there is a small chance of such a development. Any threat to the stability of HSBC, Europe’s largest bank, is taken seriously, however, as the US faces an unpredictable presidential election campaign.
The Trump administration introduced sanctions on 11 Chinese officials last month for “restricting the freedom of expression or assembly of the citizens of Hong Kong”, following the introduction of a controversial security law in the former British colony.
HSBC and Standard Chartered executives publicly backed Beijing over the new restrictions.
Mike Pompeo, US secretary of state, then launched a public attack on HSBC, accusing the bank of supporting the sanctioned leaders. He claimed Chinese officials had bullied it into “shutting accounts for those seeking freedom”. Watch his latest comments on China, made during a press conference with Foreign Secretary Dominic Raab earlier this week, in the video below.