1991-07-10 15:40 MONETARY AFFAIRS BRANCH.
852 865 6146 F.04
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5.
It has been suggested that the decision made on Monday to suspend the operations of the Bank was inconsistent with the earlier decision to keep the Bank open last Saturday. Let me emphasize that the decision to keep the Bank open was taken having regard to the facts available on Friday evening and in the knowledge that closure of a bank is a drastic step not to be taken lightly. Cosure at that stage would also have undermined the attempt to gain the support of the Government of Abu Dhabi. However, when it became clea: that support would not be forthcoming, there seemed no point in riskin; a draining of cash from the bank which would impair the assets of the Bank and could well have resulted in some depositors being repaid in full to the disadvantage of the rest.
6.
As to the way ahead, the Commissioner has continued discussions with the Government of Abu Dhabi, but these have not yet produced any result. There remains, however, the possibility of a sale of the bank and this is being pursued with various interested parties.
7.
It has just been brought to our notice that a liquidator has been appointed to the Bank's holding company in Luxembourg. The Commissioner is sending representatives to Luxembourg to discuss the arrangements necessary to the sale of the Bank in Hong Kong.
8.
Some have called for the use of the Exchange Fund to rescue the bank or pay off depositors. In this connection, I must draw attention to section 3(1) of the Exchange Fund Ordinance which states
that -
/the
Exchange Fund