TNAG-1007-FCO40-1257-Appointment-of-the-new-Governor-to-Hong-Kong-Parliamentary-q-1981 — Page 25

CONFIDENTIAL

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textiles industry to repeat this exercise in view of the recession.

This would provoke a very hostile reaction from Hong Kong.

18. The Prime Minister has spoken of the need for a 'tough' successor

to the MFA. However, although no detailed decisions on the United

Kingdom position have been made, Ministers have agreed that it would

not be desirable to cut back Hong Kong's quotas again. There are

indications that the Territory would accept very limited or even

nil growth rates in quotas, and this will probably be sought by the

United Kingdom.

ROYAL BANK OF SCOTLAND

19. The Hongkong and Shanghai and Standard Chartered Banks have

each made bids for the Royal Bank of Scotland.

The Secretary of State

for Trade has referred the bids to the Monopolies and Mergers Commission

which has up to 6 months in which to reach a decision.

20. It would not be appropriate for the Minister to make any further

comment on the bids.

Hong Kong and General Department

13 May 1981

CONFIDENTIAL