XN000022-1991-07-08 — Page 6

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MONDAY, JULY 8, 1991

"THE SECOND THING IS THAT IT HAS BECOME CLEAR THAT THE OPERATIONS OF THE BANK COULD BE AFFECTED BY UNCERTAINTIES ABOUT ITS FUTURE AND ABOUT ITS RELATIONSHIPS WITH THE REST OF THE BCC GROUP.

"TO QUOTE ONE EXAMPLE, WE ARE AWARE THAT THE CREDIT CARD COMPANY, VISA INTERNATIONAL, HAS BLOCKED CREDIT CARDS ISSUED BY BCCHK SO THAT THOSE CREDIT CARDS ARE NO LONGER VALID.

**WE BUSINESS IT IS HAVING DIFFICULTIES GETTING BANK COUNTER-PARTIES TAKE ITS NAME. AND THAT IS THE BASIC BUSINESS OF THE BANK.

ARE ALSO AWARE THAT FOR THE BANK'S BASIC TRADE-FINANCE

ΤΟ

"SO WE FACE THE SITUATION WHERE IF WE ALLOW THE SITUATION ΤΟ CONTINUE, THE BANK MIGHT RUN INTO LOSSES AND THE ASSETS OF THE BANK WOULD BE IMPAIRED," HE SAID.

FACTOR

WITHOUT UNDUE WITHDRAWAL OF

MR. CARSE POINTED OUT THAT ANOTHER OBVIOUSLY RELEVANT WAS THAT ALTHOUGH THE BANK HAD GOT THROUGH SATURDAY DIFFICULTIES, THERE WAS A POSSIBILITY OF A DISORDERLY FUNDS FROM THE MARKET WHEN THE BANK OPENED TODAY.

"SO IN THE LIGHT OF THAT, BOTH FROM THE PROSPECTS OF THE POSSIBILITY OF A DISORDERLY WITHDRAWAL OF FUNDS, THE POSSIBILITY THAT SOME DEPOSITORS WILL GET THE MONEY BACK IN FULL WHEREAS THOSE WHO LEFT THE MONEY IN THE BANK WILL NOT, WE DECIDED THAT THE BEST THING, THE FAIREST THING TO ALL CONCERNED WAS TO DRAW THE LINE AT THIS POINT AND: TO SUSPEND THE OPERATIONS OF THE BANK."

MR. CARSE ALSO TOOK THE OPPORTUNITY TO SET THE MATTER IN CONTEXT SO THAT THE PUBLIC WERE AWARE OF THE HISTORICAL BACKGROUND AND THE TIME-TABLE OF EVENTS LEADING UP TO THIS DECISION.

"I THINK THE FIRST THING TO BE AWARE OF IS THAT THE HONG KONG BANKING COMMISSION, ALONG WITH OTHER SUPERVISORY AUTHORITIES, PARTICULARLY IN ENGLAND AND IN LUXEMBOURG AND THE CAYMAN ISLANDS HAVE BEEN MEETING FOR SOME TIME TO CONSIDER THE AFFAIRS OF THE BCC GROUP IN WHAT HAS BEEN KNOWN AS A COLLEGE OF SUPERVISORS AND THAT COLLEGE HAS BEEN CONSIDERING PLANS FOR RESTRUCTURING THE BCCI GROUP IN A WAY WHICH WOULD. LEAVE THREE SEPARATE BANKS, ONE BASED IN HONG KONG, ONE BASED IN ENGLAND AND ONE BASED IN THE CAYMAN ISLANDS, EACH OF THEM BRING OWNED BY THE ABU DHABI GOVERNMENT.

"THOSE PLANS WERE WELL-ADVANCED AND WERE DUE TO BE CONSIDERED BY THE SUPERVISORS BY THE END OF JUNE. WHAT HAPPENED RECENTLY IS THAT WE WERE SUMMONED TO AN EMERGENCY MEETING OF THE COLLEGE OF SUPERVISORS IN LONDON LAST WEEKEND AND MY CONSULTANT HERE JOHN ASPDEN WENT OFF ΤΟ LONDON LAST WEEKEND AND ATTENDED A MEETING ON TUESDAY.

**WE RECEIVED THE RESULTS OF THAT MEETING ON WEDNESDAY WHICH INDICATED THAT THERE WERE PROBLEMS WHICH WE WERE NOT PREVIOUSLY, AWARE OF IN THE BCCI GROUP, BUT AS FAR AS WE KNEW AT THAT STAGE, THEY Dib NOT AFFECT THE HONG KONG OPERATION.

"SO ON WEDNESDAY WE BEGAN PREPARING CONTINGENCY PLANS TO DEAL WITH THE PROBLEM AND ONE OF THE MAIN THINGS WE DID WAS TO PUT IN TEAM OF BANK EXAMINERS TO LOOK AT THE BANK AND THEY BEGAN WORK ON

THURSDAY.

/"BY FRIDAY,