XN000022-1991-07-10 — Page 7

5

WEDNESDAY, JULY 10, 1991

"THIS FOLLOWED THE DISCOVERY BY THE BANK OF ENGLAND of SUSPECTED FRAUD IN PARTS OF THE GROUP OUTSIDE HONG KONG. THE RESULTS OF THAT MEETING WERE RECEIVED IN HONG KONG ON WEDNESDAY, JULY 3.

"VARIOUS CONTINGENCY MEASURES WERE IMMEDIATELY PUT IN PLACE BY THE COMMISSIONER OF BANKING'S OFFICE, INCLUDING SENDING A TEAM OF BANK EXAMINERS INTO THE BANK TO EXAMINE ITS LOAN BOOK, HE SAID.

ל

"ON THE EVENING OF FRIDAY, JULY 5, IT WAS ANNOUNCED THAT SUPERVISORY AUTHORITIES IN A NUMBER OF COUNTRIES HAD CLOSE DOWN THE BUSINESS OF PARTS OF THE GROUP.

IN LONDON MOVED ΤΟ

"A DRCISION HAD TO BE MADE AT THAT POINT ON WHETHER TO ALLOW THE BANK TO OPEN THE FOLLOWING MORNING OR NOT. SINCE THE BANK IS A

COMPLETELY SEPARATE ENTITY FROM THE REST OF THE GROUP AND SINCE ITS OPERATIONS HERE WERE CONSIDERED SOUND AND VIABLE, THE INITIAL CONCERN WAS TO TRY TO KEEP THE BANK OPEN, HE SAID.

"I

SIR PIERS SAID THE BANK MANAGED TO TRADE RELATIVELY NORMALLY ON SATURDAY, ALTHOUGH SOME WITHDRAWAL OF DEPOSITS WERE MADE.

"WE TOOK THE OPPORTUNITY TO HOLD DISCUSSIONS WITH THE GOVERNMENT OF ABU DHABI, WHICH THROUGH ITS SHAREHOLDING IN THE PARENT IS EFFECTIVELY THE ULTIMATE MAJORITY SHAREHOLDER OF THE BANK, ON THE QUESTION OF FINANCIAL SUPPORT FOR THE BANK.

"THE GOVERNMENT OF ABU DHABI HAD, FOR THE PURPOSES OF THE BANK'S 1990 ACCOUNTS, PROVIDED A LETTER OF COMFORT WHICH CONFIRMED THEIR INTENTION TO PROVIDE THE FINANCIAL SUPPORT REQUIRED TO ENABLE THE BANK TO CONTINUE TRADING FOR THE FORESEEABLE FUTURE, THE FINANCIAL SECRETARY SAID.

!

"THE COMMISSIONER WISHED TO HAVE THIS SUPPORT REAFFIRMED AND INDEED STRENGTHENED IN THE CHANGED CIRCUMSTANCES. A REPRESENTATIVE OF THE COMMISSIONER'S OFFICE FLEW TO ABU DHABI TO HOLD DISCUSSIONS OVER THE WEEKEND WITH THE GOVERNMENT OF ABU DHABI.

"HOWEVER, IT BECAME CLEAR ON SUNDAY, JULY 7. THAT THE GOVERNMENT OF ABU DHABI WAS UNWILLING ΤΟ PROVIDE THE NECESSARY FINANCIAL BACKING TO THE BANK, SIR PIERS SAID.

FR

THE FINANCIAL SECRETARY SAID DURING THE WEEKEND IT ALSO BRCAMK CLEAR THAT THE BANK'S ABILITY TO CONDUCT ITS BUSINESS COULD BR AFFECTED BY THE PROBLEMS ELSEWHERE IN THE GROUP.

"IN THE ABSENCE OF SUPPORT FROM THE MAJORITY SHAREHOLDER, AND GIVEN THAT A DISORDERLY WITHDRAWAL OF CASH COULD NOT BE RULED OUT, THE COMMISSIONER OF BANKING INSTRUCTED THE BANK NOT TO OPEN FOR BUSINESS FROM MONDAY, JULY 8, UNTIL FURTHER NOTICE.

"HE ALSO ASSUMED CONTROL OF THE BANK. RESTRICTIONS WERE PLACED ON THE BANK'S BUSINESS TO FREEZE DEPOSITS AND PREVENT THE MOVEMENT OF FUNDS OUT OF THE BANK IN ORDER TO SAFEGUARD THE INTEREST OF DEPOSITORS," SIR PIERS SAID.

THERE WERE AT PRESENT SOME 40,000 DEPOSITORS, WHOSE DEPOSITS TOTALLED $11 BILLION, OF WHICH $4 BILLION WAS PLEDGED AS COLLATERAL AGAINST LOANS, THE FINANCIAL SECRETARY SAID.

H

/6