SECRET: LANDSMAN
COMMERCIAL IN CONFIDENCE
Fair Trading, the Secretary of State for Trade and Industry and, in the light of his decision, possibly the Monopolies' and Mergers' Commission, whose enquiry would be expected to
take around three months.
It follows that HMG are not favouring or disfavouring any bid or potential bid. It is not clear why in these
circumstances you need to be in such a rush, and there are
dangers in that, though I understand you may feel a need to
respond.
- I am not up to date on your discussions with the Bank of
England today, but know they need time to study and discuss the additional data you have provided. Very much hope that you will continue your discussions with them, with the aim
of meeting their concerns, and meanwhile not take any steps
which would reveal that the UK authorities are not at
present in a position to take a view on any bid you make for
Quarterdeck.
- If you were to make a public bid at this stage, the Bank
of England would be obliged to make clear they had not yet
approved it and that their approval could not be taken for
granted. If the Bank did not make this clear a false market
would be created in the shares of the two companies. But such a Bank of England statement would be extremely damaging
to Hong Kong and to the Hong Kong and Shanghai Bank: the
markets could well interpret it as a lack of confidence on
the part of the UK authorities in the Hong Kong Bank.
- Can you be confident that discussion in your Board on
10 March will not leak, either in Hong Kong or to the
Chinese?
SISABJ/2
SECRET: LANDSMAN
COMMERCIAL IN CONFIDENCE