CONFIDENTIAL: COMMERCIAL IN CONFIDENCE
HONGKONG AND SHANGHAI BANKING CORPORATION'S BID FOR ROYAL BANK OF SCOTLAND : ESSENTIAL FACTS
1.
The Hongkong and Shanghai Banking Corporation (HSBC) and
Standard Chartered Bank (SCB) bids for Royal Bank of Scotland referred
on 1 May 1981 by Secretary of State for Trade to Monopolies and
Mergers Commission (MMC). MMC have (December 1981) submitted Report
to Secretary of State for Trade.
2.
grounds:
3.
Report recommends both bids be rejected on following
a) SCB bid: effects on career prospects, initiative and
business enterprise in Scotland would be damaging to
public interest of UK as a whole.
b) HSBC bid: same adverse effects on Scotland would apply.
In addition, 'transfer of ultimate control of significant
part of clearing bank system outside UK would have adverse
effect of opening up possibilities of divergence of
interest which would not otherwise arise'.
In arguments leading to these Conclusions, MMC careful to stress
not merely that they do not regard HSBC as 'foreign' bank, but that
they are not attempting to speculate on hypothetical future develop-
ments in Hong Kong. Nor do they regard Bank of England's arguments
of alleged gaps in Hong Kong supervision system as convincing.
They rely on belief that 'possibilities of conflict of interest'
might arise where overseas parent company felt bound to respond to
policy requirements of its own home government and, more generally,
to give primacy to its responsibility to needs and interests of people
of its area. While stressing that it is not hostile to competition
as such, MMC argues that in industry central to economy such
CONFIDENTIAL : COMMERCIAL IN CONFIDENCE
/possibilities
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