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POSITIONS. CURRENTLY, THE HONGKONG BANK GROUP HAS ALMOST 30 PER CENT OF TOTAL DEPOSITS, THE MAINLAND CHINA BANKS HAVE ABOUT 15 PER CENT (SOMEWHAT LARGER IF WE ADD KA WAH AND UNION BANK OF WHICH OTHER CHINESE ENTITIES HAVE ASSUMED CONTROL) AND STANDARD CHART- ERED SOMETHING LESS THAN 6 PER CENT, .E. WELL BELOW THE TWO LEADING GROUPS BUT WELL ABOVE ANY OTHER HWD:HVIDUAL BANK WHETHER LOCAL OR FOREIGN. A COUPLE OF ACQUISITIONS MIGHT BRING THEM UP TO ABOUT 8 PER CENT BUT, OF COURSE, THEIR POTENTINAL FOR GROWTH WOULD BE SUBSTANTIAL. COMPETITION FOR MARKET SHARE BETWEEN THESE THREE GROUPS PLUS THE THREE LARGEST AMERICAN BANKS AND TWO JAPANESE BANKS WOULD CLEARLY FURTHER SQUEEZE THE REMAINING LOCAL
BANKS. THERE COULD ALSO BE TWO FURTHER CONSEQUENCES.
*. A CLEAR GROUPING ON THESE LINNES WOULD LEAVE BANK OF EAST ASPA IN AN EXPOSED POSITION. THIS IS A WELL RUN, CONSERVATEVE AND PROF TABLE BANK WITH #TS SHARES TIGHTLY HELD BY THE FOUNDER FAMILIES. IT COULD WELL FIND ITSELF IN THE CLASSIC SQUEEZE ON THE MEDIUM SIZED WHEN THE BHG UNITS BEGIN TO COMPETE. THINKING AHEAD FURTHER, THE HONGKONG BANK WOULD NATURALLY LOOK TO ITS OWN DEFENSIVE STRATEGY GIVING EMPHASIS TO ANY FURTHER THOUGHTS
OF OVERSEAS ACQUISITIONS.
6.
AS SAID THERE IS MORE SPECULATION #N ALL THIS THAN HARD FACT. SIR Y K'S VISHT TO LONDON MIGHT GIVE US MORE FACTS AND I WOULD
VERY MUCH WELCOME YOUR REACTIONS AND THOSE OF THE BANK OF ENGLAND.
AKERS-JONES
YYYY
HMLNAN 9696
LIMITED
HKD
FED
ECON, ADVISERS PS/MR RENTON
SIR W. HARDING DR WILSON
COPIES TO:
MR C. KELLY, H. M. TREASURY MR P. KENT, BANK OF ENGLAND
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