(June 10): One of the largest shareholders in HSBC Holdings Plc and Standard Chartered Plc said it’s uncomfortable about their decision to back China’s sweeping security rules planned for Hong Kong.

In the first public comments from an investor in the London-based banks, David Cumming, chief investment officer at Aviva Investors, said he was “uneasy at the decisions of HSBC and Standard Chartered to publicly support the proposed new national security law in Hong Kong without knowing the details of the law or how it will operate in practice.”

“If companies make political statements, they must accept the corporate responsibilities that follow,” Cumming said in an emailed statement. “We expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to this law.” Spokeswomen for the banks declined to comment on Aviva’s statement.

Aviva Plc, the parent company of Aviva Investors, is the 12th largest shareholder in HSBC and the 10th largest investor in Standard Chartered, according to data compiled by Bloomberg. Together, Aviva’s stakes in the banks are worth about US$1 billion (S$1.39 billion).

Political Scrutiny

Peter Wong, HSBC’s top executive in Asia, backed China’s proposed security law last week. Standard Chartered made a statement of support shortly after. Critics have said the draft law casts doubt on whether Hong Kong still has the high degree of autonomy and independent judiciary guaranteed under an international treaty before the British handed their colony back to Chinese control in 1997.

HSBC and Standard Chartered are both headquartered in London, but make most of their profits in Asia. Hong Kong accounted for more than US$12 billion of HSBC’s pretax profits last year, while the Chinese city is Standard Chartered’s largest single market.

Their stance on China’s plans has already attracted political criticism in the U.K. Jacob Rees-Mogg, the governing Conservatives’ house leader, told lawmakers last week that HSBC may be more closely “aligned with the Chinese government than Her Majesty’s government.” Senior politicians from the opposition Labour Party said the banks’ positions were “completely at odds with the values framework in which financial institutions should be operating.”

Last month, U.S. Secretary of State Michael Pompeo said Beijing’s enactment of the new law would mean the U.S. has no reason to treat Hong Kong more favourably than mainland China. Pompeo has already decertified the former British colony’s autonomy under U.S. law., which may have potentially serious trade consequences.