CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE F CO
TELNO 2510
OF 091020Z AUGUST 91
AND TO IMMEDIATE HKGO LONDON
CONFIDENTIAL
170173
18
Sent
HMY
MDHIAN 8406
this 102/3
1991
OUR TELNO 2315:
BANK OF CREDIT AND COMMERCE HONG KONG LTD
(BCCHK): LATEST DEVELOPMENTS
1. THE PROVISIONAL LIQUIDATOR HAS EFFECTED PAYMENTS PURSUANT TO THE EARLY DISTRIBUTION SCHEME MENTIONED IN PARA 5 OF TUR. ON 31 JULY 1991, A REPORT BY THE COMMISSIONER OF BANKING TO THE GOVERNOR WHICH SET OUT IN DETAIL THE EVENTS LEADING UP TO THE APPOINTMENT OF A PROVISIONAL LIQUIDATOR WAS PUBLISHED TOGETHER WITH A PRESS RELEASE INDICATING THAT GOVERNMENT ACCEPTED THAT AT EACH STAGE THE COMMISSIONER TOOK THE RIGHT DECISIONS WITH THE OBJECTIVE OF PROTECTING THE INTERESTS OF DEPOSITORS AND MAINTAINING THE INTEGRITY OF THE BANKING SYSTEM. THE PRESS RELEASE ALSO INDICATED THAT THERE WAS NO INTENTION AT THIS STAGE OF APPOINTING A COMMITTEE OF INQUIRY. THE POSSIBILITY OF A WIDER ENQUIRY AT SOME LATER DATE WAS NOT RULED OUT IF AT SOME LATER DATE THE INVESTIGATIONS UNDER WAY ACROSS THE WORLD REVEALED MATTERS REQUIRING FURTHER INVESTIGATION HERE. THE ADVICE OF EXECUTIVE COUNCIL HAD BEEN TAKEN IN REACHING THIS VIEW.
2.
AS A RESULT OF PUBLICATION OF THE REPORT, THE ACTIONS TAKEN BY THE COMMISSIONER HAVE WON MORE PUBLIC SUPPORT ALTHOUGH A LOT OF DEPOSITORS ARE STILL VERY VOCIFEROUS AND A SMALL NUMBER OF EMBARKED ON A LIMITED HUNGER STRIKE.
3.
THE RECENT DEVELOPMENTS REGARDING BCCI IN THE UK AND CONTACTS ESTABLISHED HERE WITH REPRESENTATIVES OF THE RULER OF ABU DHABI SUGGEST THAT THERE MAY BE SOME HOPE OF GETTING THE MAJORITY SHAREHOLDERS TO PLAY SOME PART IN A RESCUE SCHEME. THE PROVISIONAL LIQUIDATOR AND COMMISSIONER OF BANKING HAVE HAD CONTINUING DISCUSSIONS WITH A NUMBER OF BANKS, GROUPS OF DEPOSITORS AND PROMINENT BUSINESSMEN WHO HAVE EXPRESSED INTEREST IN PUTTING TOGETHER A SCHEME OF ARRANGEMENT OR OTHER PROPOSAL WHICH WOULD CONTINUE THE BUSINESS OF BCCHK ON A SATISFACTORY BASIS. IT HAS BEEN MADE CLEAR THAT THE COMMISSIONER OF BANKING'S APPROVAL IS A SINE QUA NON. MUCH THOUGH SEEMS TO HANG ON WHETHER OR NOT THE ABU DHABI AUTHORITIES ARE PREPARED TO PROVIDE AN
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