CONFIDENTIAL
THE LORD PRIVY SEAL'S MEETING WITH THE CHAIRMAN OF THE HONGKONG AND SHANGHAI BANKING CORPORATION
BID FOR THE ROYAL BANK OF SCOTLAND:
ESSENTIAL FACTS
1. Both Standard Chartered Bank (SCB) and Hongkong and Shanghai Bank
(HKSB) have made bids for the Royal Bank of Scotland (RBS).
bid has been endorsed by the RBS's shareholders.
Neither
On 1 May Secretary of
State for Trade referred both bids to Monopolies and Mergers Commission
which will report in the New Year.
2.
Bank of England is concerned about HKSB bid on three counts:
a)
HKSB is not registered in Britain, but in Hong Kong;
b)
Bank of England is doubtful of degree of supervision of the HKSB
exercised by Hong Kong Government;
c)
3.
Our
doubts about Hong Kong's long-term political and economic future. FCO takes no position on commercial merits of rival bids. concern is that HKSB should not be singled out for discrimination on grounds that it is 'non-British'. (HKSB is 'British' by virtue of its
Also need to avoid any
registration in a Dependent Territory.) suggestion that HKSB, or indeed Hong Kong itself, has an uncertain future. Rejection of HKSB bid on such grounds would damage already strained UK/Hong Kong relations and possibly prejudice UK prospects to
win major contracts in the Territory.
4.
Question of supervision of HKSB is for Bank of England and Hong Kong Government to settle. Sir Philip Haddon-Cave, Hong Kong Chief Secretary
designate, gave evidence before Monopolies Commission in August.
Hong Kong and General Department
7 October 1981
CONFIDENTIAL