6-
(ii)
(iii)
(iv)
(v)
BCCH K appeared to be uninvolved in the suspected fraud which had given rise to the problems in the rest of the BCC Group;
on the information available to me BCCHK seemed financially sound. The 1990 accounts, which had been signed off by the auditors on 28 June 1991, showed that it remained solvent as a going concern, despite having made the large provisions against bad debts. These provisions had resulted in the large loss recorded for 1990: the underlying trading business of the bank had continued to make profits. My Office had discussed the provisions closely with the bank and its auditors. In my own discussions with the audi:ors on Thursday, 4 July, they confirmed that they regarded the bank as being comfortably provisioned against bad and doubtful cebts;
BCCHI met the prudential requirements in the Bank: ng Ordinance which require banks to maintain an adequate amount of capital to support the risks in their balance sheets and to hold sufficient liquidity against the possibility that deposits will be withdrawn;
BCCHK seemed to have firm backing from its majority shareholders, the Government of Abu Dhabi, who had provided a Letter of Comfort dated 27 June 1991, containing a statement of support for the bank, for the purposes of the 1990 accounts. As already noted, as a practical demonstration of that support, the shareholders had a few days previously injected an additional $125mn of capital. The Government of Abu Dhabi had previously shown its willingness and ability to provide very substantial financial support to the BCC Group as a whole.
15. Given this assessment, I was anxious to keep the bank
open if at all possible. While bearing in mind its position as part of the BCC Group, I felt that I had to look at BCCHK on its cwn merits and not simply follow the lead taken by other supervisors whose concern was with the rest of the Group. Clearly, there was a risk that confidence in BCCHK could be affected and that there could be a run on the bank. with suitable precautionary measures, which I shall But I hoped that describe later, and, particularly, with the help of the majority shareholders, BCCHK would be able to weather the storm.
H
80'1 S660 SP8 298
(зSNOH INO) 3030 SWWOO 8T:8T 60-80-1661
7