HSBA Hsbc Holdings Plc

By Margot Patrick 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 27, 2020).

HSBC Holdings PLC has issued a statement defending its cooperation with U.S. prosecutors in a case against China's Huawei Technologies Co. after Chinese state media said the bank had set Huawei up.

HSBC said the U.S. Justice Department made formal requests for information about Huawei, a former HSBC client, and that it didn't "set a trap" for Huawei to break U.S. sanctions, as Chinese newspaper People's Daily wrote in an article Friday. The statement comes amid intensifying U.S.-China tensions over trade, Hong Kong and Huawei that have put HSBC in the crosshairs as an Asia-focused trade bank with a large U.S. operation.

Huawei and People's Daily didn't immediately respond to requests for comment.

In the statement, first released on Chinese social media and geared toward a local audience, HSBC said it wasn't involved in the DOJ's decision to investigate Huawei or to arrest Huawei finance chief Meng Wanzhou and doesn't have any hostility to the company. It said it relies on communities understanding that international banks must follow international rules, and that they should consider "the values and contributions of their services provided to international customers and local markets."

The bank, based in London but with most of its revenue coming from Hong Kong and China, has been under pressure from Chinese state media for more than a year for having handed over documents in the Huawei case. At the time, in 2016, HSBC was being monitored by the Justice Department as part of a 2012 settlement over sanctions breaches and money laundering. Huawei lawyers alleged this year in Canada that the DOJ's grip on the bank gave HSBC a motive to present Huawei as the mastermind of its sanctions violations. HSBC denies that.

The U.S. has sought to ban Huawei from its own and other countries' telecommunications networks and is seeking the extradition from Canada of Ms. Meng for allegedly misleading banks about ties between Huawei and an affiliated company in Iran. The banks, which included HSBC, cleared hundreds of millions of dollars in transactions that potentially violated international sanctions, the U.S. alleges. Ms. Meng and Huawei deny any wrongdoing. HSBC isn't a party in that case.

The spat between HSBC and the Chinese press comes two weeks after the British government said it would bar telecom companies from purchasing new equipment made by Huawei for their 5G networks. The decision marked a victory for the U.S. in its attempts to isolate the company and was seen as retaliation by Britain for China's recent imposition of a new national security law in Hong Kong. The law, criticized by many Western governments, was backed by HSBC's top executive in the region in a rare public political statement by the bank.

The recent tensions have cast a light on the tightrope HSBC walks as Hong Kong's home bank and as a financier of global trade with U.S. dollars. It was founded in Hong Kong and Shanghai in 1865 and competes with U.S. banks, including JPMorgan Chase & Co. and Citigroup Inc., in connecting multinational companies to markets and helping them manage cash.

In its statement Saturday, HSBC said it is "rooted in China" and a "supporter of its economic and social development."

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

July 27, 2020 02:47 ET (06:47 GMT)

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