Chinese Government Disciplines HSBC

by Gill Montia

Story link: Chinese Government Disciplines HSBC

The Chinese Government has taken steps to reprimand HSBC and Standard Charter, along with 27 other international and domestic banks.

The State Administration of Foreign Exchange (Safe) has disciplined 19 domestic and ten overseas banks because it believes they have been instrumental in allowing speculative foreign investors to enter China’s stock and property markets and have effectively been disguising transactions.

The action is aimed at offsetting further pressures on China’s monetary policy and its international balance of payments. The Chinese government is currently using both monetary policy and administrative tools to slow down the economy and various industrial sectors.

Some speculators have been expecting a rise in the value of the yuan, which whilst not generally convertible for solely financial purposes, has gained eight per cent since the Chinese government introduced currency reforms in mid-2005, ending the yuan’s link with the US dollar.

HSBC has confirmed that it is among the banks disciplined by Safe and that it has been in discussions with the Chinese administration to ensure that the necessary steps are taken to comply with Safe reporting requirements. Details of the punishments meted out to the banks have not been published.