TNAG-0840-FCO40-1049-Relations-between-Hong-Kong-and-China-1979 — Page 21

CONFIDENTIAL

The attached table sets out the monthly figures of "Sales

to Foreign Banke", as reported by the 13 banks in the Bank of China

group, on their forms A and B. The unverifiable assumption is that these represent sales to the Bank of Chine, Peking.

2.

The convention governing banking statistics in Hong Kong

is that the branches outside Hong Kong of a bank incorporated in Hong Kong, or the head office and other branches outside Hong Kong of a bank not incorporated in Hong Kong, are treated as entirely separate institutions from the bank's operations inside Hong Kong. Thus a sale of foreign currency by the Bank of China, Hong Kong, to its head office in Peking would be reported as a "Salc to a Foreign Bank"; and similarly a sale of foreign currency by Nanyang Commercial Bank in Hong Kong to a branch (if it has one) in Canton.

CONFIDENTIAL