CONFIDENTIAL AND PERSONAL
४
〆
乂
5.
Treasury are content.
Background
НК
A
3. The Hong Kong Government, or more precisely the Financial Secretary and his two main advisers on banking matters, Mr Nendick and Mr Carse (both from the Bank of England), have been heavily critized in the Hong Kong press for their
overall handling of the BCC (Hong Kong HK✈ affair. The critisism initially centered almost soley on the decision by the banking authorities to allow the BCC (HK) to open on
6 July Saturday and to make a
statement on the Friday
their
Publ &
night/Saturday morning to the effect that 'the operations of
unter alia
(HK remain sound and viable'. Two days later, when it
emerged that the major shareholders in Abu Dhabi were not
injectie prepared to commit themselves to inject funds, and Visa had
decided to capture any credit cards used, the Banking Commissioner had to take the decision to close the bank.
4//10
retrospect his words on Friday were unfortunate. But it is very difficult to go further than that: certainly the Bank
of England would not wish to be associated with any general
or sweeping condemnation of the actions taken by the Hong
Kong authorities in this case. The bank was elosely
This was,
consulted by Hong Kong on these matters and consider that
Hong Kong faced a very difficult situation. apparently, the first time in recent memory that a bank
might have to be closed without either the exchange fund or another bank being willing to take it on. This, and the absence of any deposit insurance scheme, was why the Hong Kong authorities tried very hard to keep it open.
(MK)
x
x
Perhaps what emerges most clearly out of the BCC Hong Kong affair and the Financial Secretary's handling of inflation Riscal and budget proposals, is probably that Hong Kong Government officials have still fully to adapt to the need to carry
polland
(and beg
¿with
LegCo and the public with them.
Hong Kong is changing
rapidly. Although the government has the same benign goodi
intentions, this is not enough: they have to justify, and put
ROFATE/2
CONFIDENTIAL AND PERSONAL
them