SE HONG KONG.
HED 67 OCT 92 08:42
PG.04
ві
HongkongBank
The Hongkong and Shanghai Banking Corporation Limited
Head Office: 1 Queen's Road Central, Hong Kong
HKA 233/
JM Gray
Chief Executive and Deputy Chairman
STRICTLY PRIVATE & CONFIDENTIAL
7th October 1992
S. Harbinson, Esq., J.P.,
Deputy Secretary for the Civil Service, Government Secretariat,
Lower Albert Road,
Hong Kong.
Your Ref: CSB-S/8 VI
Длаб бришет
PENSION SAFEGUARDS
I refer Co your letter
551
dated 25th September and apologise
that it has taken me so long to reply.
I reply below to the questions you raised in
raised them:
the order you
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.
You are correct in assuming that a bank would require the sterling deposit to be charged as collateral for the Nong Kong dollar loan. The exchange rate risk to the bank ia immediate because the value Ot its security fluctuates with changes in the sterling exchange rate. wrote to you on 11th September for instance sterling has depreciated by more that 10%; it is
is against this exchange risk that the bank would seek to protect itself by calling for margin.
Since
3. Subject το 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 το cover the exchange risk referred co 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:822 111] Facsimile:(852) 868 0244 Telex:73201 HKBG HX Telegrams: Hongbank Hongkong
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