Chinese telecommunications and technology company Huawei has another obstacle in its continuing troubles lately as two huge banks cut ties with it, according to The Wall Street Journal.
HSBC and Standard Chartered, two companies that were instrumental in giving the company access to the global financial market, have said they won’t provide Huawei with any new banking or funding because the company is too high of a risk.
The HSBC decision happened last year, but Standard Chartered made its move more recently. Huawei is under investigation from the Justice Department regarding whether it violated U.S. sanctions on Iran.
Huawei is still getting its day-to-day banking services from Citigroup. When asked about the relationship, Citigroup said it was going to review any new banking business and it would watch developments in the United States.
Huawei is in about 170 countries and it needs international banks to handle its cash, because Chinese banks don’t have the global reach it requires. Huawei has had relationships with those three banks for over a decade.
Goldman Sachs reportedly considered going into business with Huawei in 2013, but decided against it because of negative feedback from the U.S. Treasury.
Huawei was founded in 1987 and was once viewed as a golden goose for Western banks trying to expand their influence in China, because of the company’s perceived connections with the Chinese government.
“It’s the kind of client Standard Chartered or HSBC would bend over backwards for,” a former Standard Chartered executive told Reuters. “They are everywhere, and need help everywhere.”
Since 2007, however, the U.S. government has shared fears that the company’s telecommunications equipment and its security software could be exploited and pose risks to U.S. security.
On Tuesday (Dec. 18), a deputy chairman for Huawei denied the allegation that the company poses a threat.
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