TNAG-1259-FCO40-1599-The-Future-of-Hong-Kong---special-study-by-FCO--August-1982--1983 — Page 113

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from controls and a growing concentration of financial

expertise within the colony. At end-1981, 89 foreign

banks had branches in Hong Kong and a further 121

representative offices.

Hong Kong is now a significant

international financial centre, with a leading position in

loan syndication for Asian borrowers:

the financial

sector's overseas earnings make a significant contribution

to the colony's surplus on invisible trade.

8

In

The Hong Kong and Shanghai Banking Corporation (HSBC)

operates the clearing for inter-bank settlement and the

other banks maintain clearing balances with it. Two banks,

namely the Chartered Bank and the Bank of China, are

sub-clearers for 19 and 12 other banks respectively.

1964 the HSBC and the Chartered Bank, at the Hong Kong

Government's request, provided funds to avert a liquidity

crisis in the banking system. This was the only occasion

in which there has been a liquidity crisis and only 3 small

banks were involved. Funds were subsequently provided by

the Government to meet net creditors' claims. HSBC is

the main banker to the Government (including of course the

Exchange Fund) and because of its own position at the

centre of the clearing system and its role as a note-

issuing bank, HSBC is itself highly unlikely to come under

purely domestic pressure with respect to its overall

liquidity. Should it face difficulties, however, it would

/be

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