HSBC’s relations with the two countries made it a clear target because relations deteriorated, according to Willy Lam, an additional professor for the Center for Chinese Studies at the Chinese University of Hong Kong.

Split between two worlds

HSBC was founded in 1865 by Scottish businessman Thomas Sutherland, who took inspiration from the flag of his native country to create the iconic red and white hexagonal logo of the bank.

Until the 1990s, it was generally referred to as “the Hong Kong bank,” according to historians David Kynaston and Richard Roberts, who tracked the company’s rise in the book, “The Lion Wakes: A Modern History of HSBC.”

It even acted as Hong Kong’s unofficial monetary authority in some capacity when the city’s economy opened to the world, printed currencies and set the stage for foreign exchange, Kynaston and Roberts write.

“It can be said that we are a pseudo central bank,” HSBC’s former chairman, Michael Sandberg, was quoted in the book as saying in 1976. “Hong Kong’s interests and prosperity are very much in harmony with us.”

In 1992, HSBC moved its headquarters to London to comply with the takeover regulations after it acquired Midland Bank, a large British retail bank that helped new owners nearly double its number of employees.

Since then, the company has regularly considered the idea of ​​moving its headquarters from London.

Even as the company’s business grows elsewhere, HSBC might want to remain in London so as not to lose its status as a global-focused bank, according to Dragon Tang, a finance professor at Hong Kong University. He added that moving from the UK could be seen as a sign of surrender in the European market.

A company spokesman referred CNN Business to an earlier statement saying “there is no discussion to review HSBC’s global headquarters, and there are no plans to reopen the issue.”

Forced to choose

HSBC has a lot of experience in Hong Kong – and politicians know that.

“I just thought, ‘Wow,'” said Alistair Carmichael, a British MP who joined several MPs in writing to HSBC to express concern about the move. He argued that by succumbing to Beijing’s demands, the company had basically “offered itself” as political football.

“They did nothing at all,” Carmichael told CNN Business, adding that he and his colleagues had not heard from the bank. “Once you choose one side, it’s very difficult to get away from that side.”

HSBC declined to comment on criticism received by banks from British politicians.

The bank has also long been floated as a potential target for retaliation by Beijing in its battle with the West over trade, technology and national security.

Liu, the Chinese ambassador, warned this week that Britain “must bear the consequences” if China was treated as a “hostile country.”

Retaliation from China should not be a concern for HSBC. US Secretary of State Mike Pompeo condemned the company for its actions, saying that “corporate kowtows” would not get the respect of banks in Beijing.

HSBC declined to comment on the news report. Shares of companies listed in Hong Kong fell 4.3% on Wednesday after the report, while shares listed in London fell 2.9%. Stocks continued to slide Thursday in Hong Kong.

There is also anxiety within HSBC staff. An HSBC employee who has been with the bank for several years told CNN Business that workers in Hong Kong were angry when they learned of the company’s support for the law.

“I am very disappointed,” said the employee, who asked for anonymity because he was afraid of being targeted by his comments. “Clearly, banks can imagine there are some concerns.”

HSBC declined to comment on the reaction from staff.

The employee said that he wrote to management last year expressing concern about Hong Kong’s increasingly politicized business environment, and that the company had assured him that he would stay out of the political upheaval.

“I was very proud of the bank,” he said. But “if you ask me whether I feel proud or not to be a member of this bank, surely the answer right now is ‘no.'”

As diplomatic Tensions are boiling, some observers warn that companies can be forced out of the political fence again.

“They are between the devil and the deep blue sea. They want to see how the situation in China and Hong Kong subside. They want to see how much political heat in Britain remains,” Philip Augar, a British banking expert, told BBC Radio 4 on Tuesday.

“But in the end,” he added, “I think they will definitely listen more to the Chinese.”

– Sharon Braithwaite and Charles Riley from CNN contributed to this report.