WEDNESDAY, FEBRUARY 19, 1992
FS'S STATEMENT ON BCCHK IN LEGCO
I
MR DEPUTY PRESIDENT,
I WOULD LIKE TO INFORM THIS COUNCIL OF THE LATEST POSITION ON THE TAKEOVER NEGOTIATIONS BETWEEN THE PROVISIONAL LIQUIDATOR OF THE BANK OF CREDIT AND COMMERCE HONG KONG (BCCHK) AND THE HONG KONG CHINESE BANK.
AS A RESULT OF THE RECENT EMERGENCE OF LARGE UNRECORDED CLAIMS FROM THE LIQUIDATORS OF BCC OPERATIONS ELSEWHERE IN THE WORLD, I REGRET TO INFORM MEMBERS THAT THE TAKEOVER NEGOTIATIONS HAVE NOW BEEN
· FRUSTRATED, AND HAVE BEEN BROUGHT то AN END BY MUTUAL AGREEMENT BETWEEN THE PROVISIONAL LIQUIDATOR AND THE HONG KONG CHINESE BANK. THE PROVISIONAL LIQUIDATOR HAS CONVEYED THIS OUTCOME то REPRESENTATIVES OF THE DEPOSITORS OF BCCHK AT A MEETING THIS MORNING.
EVER SINCE THE CLOSURE OF BCCHK, THE OVERRIDING OBJECTIVE HAS BEEN TO SECURE THE MAXIMUM PAYOUT FOR ALL CREDITORS AND DEPOSITORS. A TAKEOVER OFFERED THE BEST PROSPECTS UNTIL THE EMERGENCE OF SUBSTANTIAL NEW CLAIMS FROM OTHER PARTS OF THE BCCI GROUP IN RECENT WEEKS. IN THE FACE OF THESE NEW CLAIMS AND THE RELUCTANCE OF THE ABU DHABI SHAREHOLDERS TO PROVIDE A FULL GUARANTEE AGAINST SUCH LIABILITIES, THE BALANCE HAS UNFORTUNATELY NOW SHIFTED IN FAVOUR OF LIQUIDATION,
AS MEMBERS WILL RECALL, IN JULY LAST YEAR MOST BOCHK DEPOSITORS RECEIVED A FIRST PAYMENT OF 25 PER CENT OF THEIR DEPOSITS, SUBJECT TO AN UPPER LIMIT OF $500,000. WITH LIQUIDATION, IT IS LOPED THAT ALL DEPOSITORS WILL RECEIVE WITHIN THE NEXT SIX MONTHS AN INTERIM PAYOUT OF 35 TO 40 PER CENT, WHICH WOULD INCLUDE THE INTERIM RELIEF ALREADY PAID. ALTHOUGH IT IS IMPOSSIBLE TO PREDICT ACCURATELY THE OUTCOME OF A LIQUIDATION, THE PROVISIONAL LIQUIDATOR BELIEVES THAT IT IS NOT UNREASONABLE TO EXPECT A TOTAL PAYOUT, IN THE LONGER TERM, IN THE REGION OF 70-75 PER CENT. THOUGH I RECOGNISE THE CONCERN AND DISAPPOINTMENT - THAT WILL BE FELT BY DEPOSITORS AT THIS OUTCOME, THESE PERCENTAGES ARE AT LEAST FAR BETTER THAN BCC DEPOSITORS ELSEWHERE IN THE WORLD CAN EXPECT.
I AM DISAPPOINTED THAT THE TAKEOVER NEGOTIATIONS CANNOT BE TAKEN FORWARD. I BELIEVE THAT THE DEPOSITORS WILL HAVE THE SYMPATHY OF EVERY MEMBER OF THIS COUNCIL. BUT IT IS THE CONSIDERED JUDGEMENT OF THE PROVISIONAL LIQUIDATOR AND THE HONG KONG CHINESE BANK THAT IN THE LIGHT OF THESE NEW CLAIMS, THE NEGOTIATIONS FOR THE TAKEOVER CANNOT SUCCEED.
/I WOULD