SE HONG KONG.
WED 07 UCT 92 08:42
PG.04
162
HongkongBank
The Hongkong and Shanghai Banking Corporation Limited
Head Office: 1 Queen's Road Central, Hong Kong
! M Gray
Chief Executive and Deputy Chairman
STRICTLY PRIVATE & CONFIDENTIAL
7th October 1992
5. Harbinson, Esq., J.P.,
Deputy Secretary for the Civil Service, Government Secretariat,
Lower Albert Road,
Hong Kong.
Your Ref: CSB-S/8 VI
Dues Stuart
PENSION SAFEGUARDS
25th September and apologise
I refer co your letter dated 25th that it has taken me so long to reply.
I reply below to the questions you raised in the order you
raised them:
1. Your understanding of the loan arrangements is basically correct. Interest would be charged at regular intervals nowever and not accrued over the period of the loan.
2.
ot
You are correct in assuming that a bank would require the sterling deposit to be charged as collateral for the 11019 Kong dollar loan. The exchange rate risk Co the bank is immediate because the value
its security fluctuates with changes in the sterling exchange race. Since I wrote to you on 11th September for instance sterling
depreciated by more tnat 10%; it is against this exchange risk that the bank would seek
seek to protect itself by calling for margin.
3. Subject to the bank being satisfied with the financial strength of any external guarantor and subject to legal advice as to the wording, a guarantee would make the scheme more workable. It could for instance be used to cover the exchange risk referred to above. It is my understanding however that a guarantee Government would not be available, which question somewhat academic,
from the makes
this
GPO Box 64, Hong Kong »
Telephone:822 1111 Facsimile:(852) 868 0244 Telex:73201 HKBO HX Telegrams: Hongbank Hongkong
/2....