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Sir,
22
Hongkong and Shanghai Banking Corporation.
Hongkong, 30th December, 1920.
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With reference to Messrs. Johnson, Stokes & Master's letter to you of 18th December, and your reply thereto of 23rd idem, we note that the Government will raise no objection to the Bank's paid up capital being increased from $15 millions to $20 millions, the latter being the total amount authorised by the present Ordinance.
In your reply you enquire the reasons for the further requests preferred by Messrs. Johnson, Stokes & Master on our behalf, viz. for authority to increase the nominal capital from 820 millions to 50 millions, and for permission to amend the Ordinance so as to allow of the privilege of issuing bills and notes of the Corporation to the full extent of the paid up capital of the Bank on the conditions set forth in Sec- tion 13 of the Ordinance, and of depositing coin as security with trustees, to be approved of bythe Secretary of State, at places where the Bank has a note issue outside of Hongkong.
With regard to the proposed increase of the authoris- ed capital from $20 millions to 850 millions, we would submit the following observations:-
It is usual for the authorised capital of Banks to be considerably in excess of the issued capital, in order that additional capital may be called up as the expansion of the Bank's business necessitates that step. When the Hongkong and Shanghai Banking Corporation's paid up capital is raised to $20 millions, the Bank's position will be approximately as follows;-
Honourable
Paid up Capital
Sterling Reserve
Silver Reserve
Amount carried forward about
The Colonial Secretary,
$20,000,000.
£ 4,500,000. $21,000,000. $3,250,000.
Hongkong.