[HONG KONG] The chairman of a US congressional committee on China is calling on Bank of America and JPMorgan Chase to withdraw from working on the Hong Kong first-time share sale of battery maker Contemporary Amperex Technology Co Limited (CATL), which could be the year’s biggest listing.
The two banks are exposing themselves and their American investors to “significant regulatory, financial and reputational risks” by underwriting CATL’s listing, House Select Committee on the Chinese Communist Party Chairman John Moolenaar, a Republican from Michigan, said in letters addressed to JPMorgan chief executive officer Jamie Dimon and Bank of America CEO Brian Moynihan.
The two letters highlighted the inclusion of CATL, as the company is known, on a Pentagon blacklist in January, citing its alleged links to the Chinese military. US President Donald Trump’s America First Investment Policy memo also aims to deter Wall Street from steering American retail investors into funding CATL’s listing, according to the letters.
CATL, a major supplier to Tesla, has protested its inclusion in the US blacklist. While the blacklist carries no specific sanctions, it discourages firms from dealing with its members.
Bank of America shares rose 0.2 per cent on Thursday (Apr 17), while JPMorgan’s climbed 1 per cent. CATL’s Shenzhen-listed shares dropped 0.6 per cent in early Friday trade, with the benchmark CSI 300 Index down 0.4 per cent.
If the banks are unwilling to immediately withdraw from the deal, the committee is asking for detailed responses to 21 questions about their risk assessments, compliance protocols and possible violations of US law, according to the letters.
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Representatives for Bank of America and JPMorgan declined to comment.
A CATL spokesperson said the allegations in the letters are without merit and the company has never engaged in any military-related business or activities. The designation of CATL as a Chinese military company is a mistake, and the company is engaging with the US Department of Defense to clarify any misunderstandings, the spokesperson said.
“CATL is not short on cash and there are loads of investors lining up to get a piece of the IPO (initial public offering), so for underwriting banks, competition is fierce,” said Zhai Jingyong, managing director at Banyan Investment Management. “If these US banks drop out, they will not be missed and their roles will quickly be filled.”
The intervention comes as Hong Kong’s budding share sale rebound is put at risk by the uncertainty over the US-China trade war, with the stunning rally in the city’s benchmark index faltering since President Trump’s Apr 2 tariff announcement.
JPMorgan ranks fifth in Bloomberg’s league table this year for Asia equity and equity-linked deal activity excluding Japan, while Bank of America is in 11th place. JPMorgan was one of the banks on Xiaomi’s US$5.5 billion share sale alongside Goldman Sachs and China International Capital Corp. Both JPMorgan and Bank of America worked on Baidu’s US$2 billion sale of bonds exchangeable into shares of Trip.com Group.
First-time share sales in the Asian financial hub raised US$11.2 billion last year, almost 90 per cent higher than in 2023, data compiled by Bloomberg show. CATL’s offering may fetch at least US$5 billion, Bloomberg News has reported.
Both JPMorgan and Bank of America saw year-over-year declines in their revenue from equity underwriting in the first quarter. Uncertainty from the tariff conflict is weighing on share sale activity in the US and Europe, with most potential IPOs on hold amid market turmoil.
The committee’s letters come soon after it issued a report calling Chinese AI company DeepSeek a “profound threat” to US national security, and urged Nvidia to hand over information on its sales of chips to the firm. BLOOMBERG
