The criticism came as the government said it would not tolerate "covert and calculated" attempts by Beijing to interfere in the UK after MI5 issued an alert over spying threats.

HSBC's close ties with China, being originally founded in Hong Kong and a significant investor on the mainland where it has a major network presence, has previously been a source of controversy, with the London-based bank accused of caving in to pressure by the authoritarian regime.

This has included, in recent years, blocking the accounts of pro-democracy campaigners in the former British colony and publicly backing a controversial security law which cracked down on political dissent in the territory.

Meanwhile, Osborne, who championed closer links with Beijing during his time in office, is understood to be on the shortlist of candidates to take over as HSBC's chairman after Sir Mark Tucker stepped down in September.

As chancellor back in 2015, he had declared a "golden era" of UK-China relations based on trade and investment.

He subsequently congratulated the then-prime minister Boris Johnson in 2021 for "seeing off the hotheads" on the Tory backbenches who wanted a more hawkish approach to China over its human rights record.

Osborne argued at the time for engagement with Beijing rather than confrontation.

In a ministerial statement on Tuesday, security minister Dan Jarvis told the Commons that MI5 had said China was attempting to "recruit and cultivate" individuals with access to sensitive information about Parliament and the UK Government, often masked through cover companies and head-hunters.

He announced a package of measures to disrupt the threats, including steps "to degrade the ecosystem of proxy cover companies, organisations and individuals being used by foreign states to facilitate interference and espionage targeting our democratic institutions".

China has denied the allegations and lodged "stern representations" with the UK Government over the warning, an embassy spokesman said.

Responding to the ministerial statement in the House of Lords, journalist and former newspaper editor Charles Moore, who sits as Lord Moore of Etchingham, said: "In the statement, the government express their desire to 'degrade the ecosystem of proxy cover companies'.

"I am not quite accusing the bank I am going to mention of being a proxy cover company, but I would point out the enormous level of vested interest in China in this way, which leads to weakness.

"Britain's biggest bank, HSBC, is a major sinner in this respect.

"HSBC famously closed down three accounts of the League of Social Democrats in Hong Kong."

The author and non-affiliated peer added: "Without wishing to be too personal, it is not wildly encouraging to hear that George Osborne, he of the golden era, is a candidate to be the new chairman of HSBC.

"If he was chairman, I do not imagine that we would get a very rigorous attempt to clamp down on Chinese illegitimate activity.

"I ask the government whether even huge organisations, such as HSBC, should be more carefully monitored."

Both Osborne and HSBC have been contacted for comment.

HSBC shares were down 0.4% at 1,051.80 pence in London on Wednesday.

By Nick Lester, Chief Lords Reporter

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