Six of the world's leading banks have bought shares in a company that uses Chinese prison labour, reports say.

Deutsche Bank, HSBC, ING, Merrill Lynch, Morgan Stanley and UBS are among the top 10 shareholders of Henan Rebecca, a leading wig manufacturer and exporter, The South China Morning Post reported in August.

Guards at Xuchang County Labour Re-education Camp and No. 3 Labour Re-education Camp confirmed inmates carried out low-skilled processing for Henan Rebecca, a claim supported by workers at the company. The work involved sorting and plaiting hair before being turned into wigs.

Under international law, work carried out through laojiao, labour through re-education, is classed as forced labour because inmates may not choose whether or not they work and they usually are not paid.

Laojiao inmates are typically made to work 16 hour days producing an array of goods; those who cannot meet the quota, activists say, are sometimes given electric shock or other abuse.

The banks deny any direct stock holding, though it is understood they acted as purchasing agents through investment schemes. Most of Henan Rebecca's wigs are exported to countries in Africa, Asia and Europe as well as to the United States, which prohibits the import of products made using forced labour.

The company denies the accusation and has invited the Business & Human Rights Resource Centre to investigate.