XN000022-1986-03-27 — Page 39

THURSDAY, MARCH 27, 1986

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UNION BANK OF HONG KONG LIMITED

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EXERCISING HIS POWERS UNDER SECTION 13(1) (111) OF THE BANKING ORDINANCE AND AFTER CONSULTATION WITH THE FINANCIAL SECRETARY, THE COMMISSIONER OF BANKING HAS DIRECTED JARDINE FLEMING AND COMPANY LIMITED TO ASSUME CONTROL AND CARRY ON THE BUSINESS OF UNION BANK OF HONG KONG LIMITED.

THIS ACTION HAS BEEN TAKEN IN VIEW OF THE PROLONGED ABSENCE SINCE SEPTEMBER, 1985, FROM HONG KONG OF THE CHAIRMAN AND CHIEF EXECUTIVE, MR OEN YIN-CHOY. MR OEN'S ABSENCE

HAS CONTRIBUTED TO THE DECISION OF A NUMBER OF DIRECTORS TO RESIGN. SOME OTHER DIRECTORS WISHED TO RESIGN BUT WHEN REQUESTED BY THE COMMISSIONER TO REMAIN IN OFFICE IN THE INTEREST OF DEPOSITORS AGREED TO DO SO.

THE COMMISSIONER HAS ALSO HAD REGARD TO THE LIQUIDITY OF THE BANK WHICH HAS DETERIORATED FROM VERY HIGH LEVELS IN THE MIDDLE OF LAST YEAR. MORE VIGOROUS ACTION IS NEEDED TO RECOVER THE BANK'S LOANS THAN HAS BEEN POSSIBLE IN THE ABSENCE OF THE CHIEF EXECUTIVE.

THE COMMISSIONER HAS REQUESTED JARDINE FLEMING IN ITS CONTROL OF THE BANK TO ATTACH PRIORITY TO THE RESTORATION OF LIQUIDITY BY THE RECOVERY OF LOANS. UNTIL THAT IS ACHIEVED THE EXCHANGE FUND OF THE HONG KONG GOVERNMENT IS MAKING AVAILABLE A LINE OF CREDIT SUFFICIENT TO ENSURE THAT THE CLAIMS OF ALL DEPOSITORS AND OTHER CREDITORS CAN BE MET IN FULL ON TIME. THIS WILL ALSO BE AVAILABLE TO UNION FINANCE LIMITED, THE BANK'S WHOLLY OWNED REGISTERED DEPOSIT-TAKING SUBSIDIARY. THIS LINE OF CREDIT IS BEING MADE AVAILABLE ON NORMAL COMMERCIAL TERMS. THE COMMISSIONER IS SATISFIED THAT THE BANK HAS SUFFICIENT ASSETS TO ENABLE THE FULL REPAYMENT IN DUE COURSE OF THIS LINE EVEN IF FULLY DRAWN.

THE BANK WILL CONTINUE TO BE OPEN AND TO OPERATE NORMALLY WHILE UNDER THE COMMISSIONER'S DIRECTION. THE DIRECTORS WILL CONTINUE TO HOLD OFFICE, BUT WILL HAVE NO EXECUTIVE AUTHORITY FOR THE OPERATIONS OF THE BANK. THIS WILL REST WITH JARDINE FLEMING AND COMPANY LIMITED WHO WILL HAVE BEEN DIRECTED BY THE COMMISSIONER TO MANAGE THE BANK FOR THE BENEFIT OF ITS DEPOSITORS AND OTHER CREDITORS. WHOSE INTERESTS ARE PARAMOUNT AND ARE FULLY PROTECTED BE THESE ARRANGEMENTS. THE COMMISSIONER HAS, HOWEVER, REQUESTED JARDINE FLEMING TO ADVISE THE BOARD OF SERIOUS PROPOSALS WHICH MAY BE MADE FOR THE PARTICIPATION OF A NEW INVESTOR.

THE COMMISSIONER HAS INFORMED THE SECURITIES COMMISSION OF HIS ACTION AND HAS RECOMMENDED THE SUSPENSION OF TRADING IN THE BANK'S SHARES UNTIL SUCH TIME AS THE CONTROL OF ITS BUSINESS IS RESTORED TO THE BOARD OF DIRECTORS.

ENQUIRIES ON THIS NOTICE SHOULD BE MADE TO THE COMMISSIONER, TEL. NO. 5-8622671. THE OFFICE WILL REMAIN OPEN FOR ENQUIRIES ON FRIDAY MORNING, MARCH 28.

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