CONFIDENTIAL: COMMERCIAL IN CONFIDENCE: MARKET SENSITIVE
be the case. But they may come forward with proposals for ending HSBC's "privileged" status at the heart of the Hong Kong banking system: a development which may take place gradually anyway, with the creation of a Hong Kong Monetary Authority.
4. We now await Mr Heseltine's formal announcement. Meanwhile Sir Leon Brittan has today announced that the European Commission has cleared the HSBC bid. This will allow the Midland shareholders to decide to go for a merger with the HSBC even before hearing whether the MMC is prepared to allow the Lloyds bil to proceed.
5. It remains to be seen of course whether Lloyds have any more strategems up their sleeves. Lloyds might for example seek to challenge the EC ruling. Their most recent offer to the OFT was to divest themselves of certain banking operations in order to avoid reference to the MMC. But the clear consensus at the Mergers Panel which I attended last week was that this issue was quintessentially the kind of issue which should be addressed by the MMC, which could call upon analytical resources not easily available to the Office of Fair Trading.
R A Burns
EM3ABT CONFIDENTIAL:COMMERCIAL IN CONFIDENCE:MARKET SENSITIVE