CONFIDENTIAL
2
fer to London for rulings.
1
A request' from the Bank of England is t quite the same thing in territories abroad as it is in London! In fact, an examination of even the more financially-sophisticated DOTS shows that on these criteria there is little or no need for detailed application of the banking measures (though a general warning might be appropriate so that the niceties are seen to be observed
-
see below). In Hong Kong, liabilities and claims of 171 banks vis-a-vis Iran (including the Hongkong and Shanghai Banking Corporation, though many would not in fact be 'local' banks) are currently less than £l mn. and £ mn. respectively, and those of 272 other deposit-taking institutions (many of which are foreign-owned, in some cases Iranian-owned) are £2 mn. and £7 mn. In the Cayman Islands, there is in fact only one locally-owned bank (the Cayman National Bank), all the rest being entities which are in one way or another foreign-owned.
We note that the guidance telegram No.380 of 9 May to Hong Kong and others mentioned the existence of the voluntary measures in the UK, without giving any indication as to whether or how they would be extended to the DOTS. In view of the foregoing, we suggest that it would be sufficient for the DOTS to be advised in broad outline of the UK banking measures and how they have been administered, with a rider on the following lines: "In view of the limited or non-existent nature of banking business with Iran in which locally-owned banks in your territory are involved, you should merely arrange for such locally- owned banks to be urged to exercise restraint in their banking relationships with Iran. Where appropriate, they should also be urged to seek guidance if they should be approached regarding some large or unusual transaction involving Iran. In the perhaps unlikely event of such cases being referred to you, please request further advice from London.". In the case of Hong Kong, the Financial Secretary might well feel that it was sufficient to take the four main banks (Hongkong and Shanghai, Hang Seng, Bank of East Asia - all locally-owned - and Chartered) into his confidence. The language of the messages to DOTS may require some fine tuning as the situation, and our thinking, develops; in view of the imminent long weekend, I thought it better to get this letter off, even though I have not been able to consult my colleagues to the extent I would have liked.7
In practice, it seems unlikely that either our EEC partners or the Americans will be exercised about the detailed way in which the DOTS are advised, as long as we are in a position to say that guidance appropriate to the scale of Iranian business (if any) is being given. It may be therefore that, if rather little interest is evinced, less specific guidance than suggested above might be all that is required.
Stephen
I am copying this letter to Nicholas Bayne (FCO/FRD) and Chris Lamport (FCO/MED).
Yours sincerely
Peter Explen
PB Edgley
J.
No comments yet.
Private notes are available after approval.