CONFIDENTIAL
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MDHIAN
INCORPORATED OUTSIDE HONG KONG ARE LIKELY TO BE GRANTED A LICENCE IF THEY ARE ABOVE A CERTAIN SIZE (CURRENTLY THIS MEANS THAT THEY MUST RANK IN THE WORLD'S THREE HUNDRED LARGEST BANKS, (JF AND CO, WOULD RANK A LONG WAY BELOW THIS), AND ARE PROPERLY SUPERVISED ETC. FOR (NEXT WORD UNDERLINED) LOCALLY INCORPORATED APPLICANTS, MUCH LOWER SIZE CRITERIA APPLY. IN ADDITION TO MEETING THESE THE LOCAL APPLICANT MUST HAVE BEEN A DEPOSIT-TAKER FOR AT LEAST TEN YEARS AND BE OF GOOD STANDING. ALSO, CRUCIALLY IN THE CASE OF JARDINE FLEMING, TO BE TREATED AS LOCAL THE APPLICANT HAS TO BE PREDOMINANTLY BENEFICIALLY OWNED BY HONG KONG INTERESTS.
5. THE ORIGIN OF THE PROVISION THAT TO BE TREATED AS LOCAL A BANK HAD TO BE PREDOMINANTLY BENEFICIALLY OWNED BY HONG KONG INTERESTS WAS PRINCIPALLY TO PREVENT OVERSEAS BANKS INCORPORATING LOCAL SUBSIDIARIES TO CIRCUMVENT THE SIZE CRITERION, WHILE LEAVING OPEN THE REALISTIC POSSIBILITY THAT LOCALLY OWNED DEPOSIT-TAKING COMPANIES COULD ASPIRE TO BECOME FULL BANKS. THE OBJECT OF EXCLUDING SUBSIDIARIES OF AN OVERSEAS BANK FROM THE LOCAL APPLICANT ROUTE IS ALSO TO ENSURE THAT FOREIGN BANKS COME INTO HONG KONG AS BRANCHES WITH FULL SUPPORT FROM THEIR HEAD OFFICES IN TERMS OF CAPITAL AND EFFECTIVE SUPERVISION OF THEIR HOME REGULATORY AUTHORITY.
6.
JF AND CO WAS INCORPORATED IN HONG KONG IN 1970 AS A 50:50 JOINT MERCHANT BANKING VENTURE BETWEEN JARDINE MATHESON AND ROBERT FLEMING. INITIALLY, JF AND CO WAS THE GROUP HOLDING COMPANY. IN 1982, THERE WAS A GROUP REORGANISATION, FOLLOWING WHICH THE TOP COMPANY BECAME JARDINE FLEMING HOLDINGS.
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{
WHEN EXCO CAME TO CONSIDER JF AND COS APPLICATION FOR A BANKING
LICENCE IN FEBRUARY 1989 THEY TOOK THE VIEW THAT THE CRITERION THAT
A LOCAL APPLICANT SHOULD BE PREDOMINANTLY BENEFICIALLY OWNED BY
HONG KONG INTERESTS WAS NOT CLEARLY MET. (INDEED KESWICK'S
REFERENCE TO JF AND CO BEING A BRITISH CONTROLLED MERCHANT BANKS SEEMS TO MAKE THE SAME POINT). NEITHER OF JARDINE FLEMING'S ULTIMATE PARENT COMPANIES, NAMELY ROBERT FLEMING AND JARDINE MATHESON, IS HONG KONG INCORPORATED. UNLESS THE LICENSING CRITERIA WERE CHANGED, GRANTING A FULL BANKING LICENCE TO JF AND CO UNDER THE CRITERIA FOR A LOCAL INSTITUTION (SINCE IT DID NOT MEET THE CRITERIA FOR A NON HONG KONG INSTITUTION) WOULD BE IMPOSSIBLE TO
JUSTIFY PUBLICLY, PARTICULARLY AGAINST THE BACKGROUND OF THE MAJOR PUBLICITY GIVEN TO JARDINE MATHESON LEAVING HONG KONG IN 1984 TO BE RE-INCORPORATED IN BERMUDA. CONSEQUENTLY, EXCO DECIDED THAT JF AND CO'S APPLICATION SHOULD NOT BE DETERMINED UNTIL A THOROUGH REVIEW
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