SECRET
4/13
૭૪-
32
ed to 102/6
CALL ON MR RIDLEY BY THE GOVERNOR OF HONG KONG : 22 JUNE 1981
Present:
Mr Nicholas Ridley MP
Sir Murray MacLehose GBE KCMG KCVO
Mr RJT McLaren
Mr R D Clift
Mr K D Temple
HONGKONG AND SHANGHAI BANK (HSBC) BID FOR THE ROYAL BANK OF SCOTLAND
1.
Mr Ridley emphasised that the Governor of the Bank of England was deeply committed to opposing the HSBC bid. Sir M MacLehose said that he was not unduly disturbed at the idea of leaving the decision to the Monopolies Commission. A decision against the HSBC could be tolerated provided that it was presented fairly and not, for instance, on the grounds that the Bank was not 'British'. He was seeing the Governor of the Bank of England that afternoon and could present the position in this way. Alternatively he could ask Mr Richardson what assurances he would require from the Chairman of HSBC which might placate the Bank of England. He did not accept that simply because Mr Sandberg would not withdraw his bid this meant that the HSBC would not accept normal prudential advice from the Bank of England.
2. Mr Ridley said that he saw the Bank of England's fears as threefold:
3.
a) the possibility of a flood of foreign banks bidding
for British clearing banks;
b) the fact that the Bank of England's direct powers of
supervision would only be over the UK subsidiary and not over the parent bank in Hong Kong (he thought that point could probably be met);
c) the fact that the Bank of England was used to dealing with the Big Four Banks in the UK and getting instant response to detailed requests and suggestions; they were doubtful as to whether HSBC would be sufficiently responsive.
Sir M MacLehose commented that the idea of a horde of foreign banks putting in bids for the other UK clearing banks seemed unrealistic, since they were all too large. Mr Ridley said that even if it were likely it should more properly be dealt with by direct legislation on regulation by HMG than through the Monopolies Commission.
DISTRIBUTION:
HKGD (to enter)
PS/Mr Ridley
Sir E Youde o/r
Mr Donald
Lord Bridges
ERD
Mr D R Ford, Hong Kong Government Office, London, (Personal)
Acting Governor, Hong Kong (Personal)
SECRET