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and resiliency of Hong Kong's interbank market. As you know, Citicorp's commitment to Hong Kong has been uninterrupted for over eighty years dating from the establishment of a branch in Hong Kong of International Banking Corporation, another offshore bank which is wholly-owned by the Citicorp
organization and incorporated in the State of Connecticut in the United States.
CBC proposes to engage in commercial banking activities in Hong Kong similar to those which it currently conducts elsewhere. The main purpose for doing so is to enhance Citicorp's flexibility in funding its worldwide activities, particularly those in the United States. The establishment of a Hong Kong branch would permit CBC to add the interbank market for short term funds to the offshore long and intermediate term markets in which it can currently raise funds. Although Citibank, N.A. has access to the interbank market, U.S. bank regulations prohibit Citibank, which is a domestic banking subsidiary of Citicorp, from lending funds raised therein to Citicorp and its subsidiaries in a cost efficient manner. This prohibition does not apply to all subsidiaries in the Citicorp organization; CBC, among certain others, is exempt.
CBC is seeking such funding flexibility by the establishment of branches in the American, European, Middle Eastern and Asian time zones. Given Hong Kong's importance as a major international money center, CBC would like Hong Kong to serve as the location of CBC's first Asian branch.
The primary activities of CBC's Hong Kong branch would be:
(i) accepting U.S. dollar and, to a limited extent, other foreign currency deposits in the wholesale money market in amounts in excess of U.S. $100,000, principally by accepting interbank placements; and
(ii) placing funds with, and making loans and advances to, subsidiary and affiliated entities.
CBC would not compete to any significant degree for the consumer banking market. It may, however, make commercial loans to unaffiliated entities in amounts in excess of U.S. $100,000, engage in foreign exchange transactions and engage in other commercial banking activities. Such activities may include all of those activities which were approved by the Board of Governors of the Federal Reserve System of the United States (the "Board"), CBC's supervisory agency in the United States, when it approved application by CBC for a branch.