SECRET
112
See HKK O26/2
(1984)
HKK
18317
RECEIVED IN REGISTRY
DD 300100Z HONG KONG
GRS 476
SECRET
DESKBY 300100Z
FM FCO 291430Z DEC 83
TO IMMEDIATE HONG KONG
TELEGRAM NUMBER 1398 OF 29 DECEMBER
STRICTLY PERSONAL FOR GOVERNOR FROM CLIFT
FINANCIAL CONTINGENCY PLANNING
1.
DESK OFFICER
3 - JAN 1984
TREGISTRY
INDEX
PA
Action Tire}
NO 4
DOUGLAS BLYE WILL OF COURSE HAVE REPORTED TO YOU ALREADY ON
HIS DISCUSSIONS WITH THE TREASURY AND BANK OF ENGLAND. THE
TREASURY HAVE SINCE BEEN DOING FURTHER THINKING, FOR
LITTLER HAS WRITTEN TO THE PUS SUGGESTING A NUMBER OF MATTERS WHICH SHOULD BE GIVEN FURTHER CONSIDERATION.
2.
LITTLER RAISES THE POSSIBILITY THAT, WERE FINANCIAL CONDITIONS IN HONG KONG TO DETERIORATE SERIOUSLY, FOR INSTANCE AS A RESULT OF A TURN FOR THE WORSE IN THE TALKS, THE HONG KONG AUTHORITIES MIGHT BE DRAWN INTO CONSIDERING MORE
EXTENSIVE SUPPORT OPERATIONS FOR HONG KONG BANKS. THE TREASURY AND THE BANK OF ENGLAND ARE WORRIED ABOUT POSSIBLE CONTINGENT
FINANCIAL LIABILITY.
3. THE TREASURY REALISE THAT THE RIGHT COURSE OF ACTION ON ANY
PARTICULAR CASE COULD WELL DEPEND ON CIRCUMSTANCES. BUT IN
LITTLER'S VIEW WE SHOULD NOT SIMPLY AWAIT EVENTS. THE TREASURY
ARE ASKING FOR A NUMBER OF POINTS TO BE ESTABLISHED AND AGREED WITH YOU AS SOON AS POSSIBLE.
4.
FIRSTLY THEY NOTE THAT BLYE SAID THAT HE HOPED TO PUT IN
HAND A FACTUAL ANALYSIS OF THE DEGREE OF EXPOSURE OF DIFFERENT
HONG KONG BANKS. THE TREASURY STRONGLY SUPPORT THIS. (THEY WERE CONCERNED BY A SUGGESTION BY BLYE THAT IN THE WORST CASE, IF A
SUBSTANTIAL PORTION OF THE PROPERTY SECTOR IN HONG KONG WERE TO COLLAPSE, SOME FORM OF SUPPORT MIGHT HAVE TO BE CONSIDERED FOR THE HONG KONG AND SHANGHAI BANK). THEY WOULD BE GRATEFUL TO KNOW THE RESULT OF BLYE'S RESEARCH AS SOON AS POSSIBLE.
POSSIBLE.
5. SECONDLY THE TREASURY SUGGEST THAT THERE SHOULD BE A CLEAR
1
SECRET
2
SECRET
9512 1
-
UNDERSTANDING ABOUT PROCEDURES FOR CONSULTATION AND AGREEMENT
BEFORE HEAVY COMMITMENTS FOR FINANCIAL LIABILITY ARE ENTERED
INTO BY THE HONG KONG AUTHORITY. THEY REALISE THE NEED TO
PRESERVE YOUR POSITION AS GOVERNOR, BUT THEY POINT
OUT THAT ACTIONS AND STATEMENTS IN HONG KONG MIGHT IN SOME
CIRCUMSTANCES COMMIT UK GOVERNMENT RESOURCES.
6.
THIRDLY THE TREASURY WOULD LIKE A CHANCE TO EXPLORE, WITH US
AND YOU, THE KINDS OF CONTINGENCIES WHICH MIGHT ARISE AND WHICH
WOULD PROMPT CONSIDERATION OF GOVERNMENT SUPPORT. THEY SUGGEST
THAT WE SHOULD ATTEMPT TO DEFINE AND WHERE APPROPRIATE LIMIT THE
FORM AND EXTENT OF ANY SUPPORT WHICH MIGHT BE CONSIDERED.
7. LITTLER HAS ASKED TO HAVE A WORD WITH THE PUS ABOUT THIS
EARLY IN THE NEW YEAR BUT THEREAFTER HAS SUGGESTED A DISCUSSION
WITH YOU WHEN YOU ARE IN LONDON BETWEEN 12 AND 18 JANUARY. IT
WOULD BE VERY HELPFUL TO HAVE YOUR VIEWS INCLUDING ANY
PRELIMINARY COMMENTS WHICH MIGHT BE HELPFUL FOR THE PUS WHEN HE
SEES LITTLER NEXT WEEK.
8. INDEPENDENTLY, THE BANK OF ENGLAND HAVE ASKED WHETHER YOU
WOULD BE FREE TO SEE THE GOVERNOR, PREFERABLY ON 13 JANUARY. WE
HAVE UNDERTAKEN, SUBJECT TO YOUR VIEWS, TO SEE WHAT COULD BE FITTED
IN TO THE TIME-TABLE.
HOWE
NNNN
DISTRIBUTION
MINIMAL
HD/HKD
2
SECRET
7
CODE 18-78
Reference...
HKK 100/7
For Folio (110) see
see Annexe
2/1
KEBL