TNAG-1487-FCO40-2044-Hong-Kong-banking-Banking-Bill-1986-1986 — Page 232

CONFIDENTIAL

MORE SPECIFIC TERMS.) IN THE BANK OF ENGLAND'S VIEW IT WOULD

OBVIOUSLY MAKE NO COMMERCIAL SENSE FOR LLOYDS TO ANTAGONISE THE HONG

KONG AUTHORITIES OR TO UPSET LOCAL OPINION BY PROPOSING SIGNIFICANT

CHANGE TO THEIR HONG KONG PRESENCE OR ACTIVITIES. THE BANK OF

ENGLAND CONCLUDE THAT, WHILE LLOYDS WOULD CLEARLY WANT TO CONTROL

THEIR HONG KONG OPERATIONS IN PRACTICE, THEY WOULD ADOPT A FULLY

COOPERATIVE ATTITUDE TOWARDS THE HONG KONG AUTHORITIES. IF THE

STANDARD CHARTERED NAME WERE RETAINED THE BANK OF ENGLAND WOULD

FORESEE NO GREAT PROBLEMS FOR HONG KONG. THERE WOULD PERHAPS EVEN

BE LESS PROBLEM FOR EXAMPLE IN TERMS OF AMENDING THE

NOTE-ISSUING ORDINANCE THAN WHEN CHARTERED BECAME STANDARD

CHARTERED OR WHEN. HONG KONG AND SHANGHAI BANKING CORPORATION

ABSORBED MERCANTILE BANK.

4.

THE BANK OF ENGLAND FEEL IT IS MORE DIFFICULT TO GIVE A

REACTION TO THE HYPOTHETICAL POSSIBILITY OF AN ALTERNATIVE,

FOREIGN BIDDER. IT WOULD DEPEND WHO THE BIDDER WAS AND TO WHAT

EXTENT THEY WOULD BE INCLINED TO GIVE WAY TO THE VIEWS OF THE

HONG KONG GOVERNMENT. BUT THE COMMERCIAL ARGUMENTS WOULD REMAIN

EXACTLY THE SAME AND WOULD PRESUMABLY POINT TO THE SAME RESULT.

AT THE VERY LEAST A TAKEOVER BY A NON-BRITISH BANK WOULD ATTRACT

GREATER LOCAL ATTENTION, AND IT COULD INDEED OPEN THE QUESTION OF

THE PARTICIPATION OF OTHER BANKS INCLUDING THE BANK OF CHINA

IN NOTE-ISSUING. IN THIS CONTEXT THE

BANK OF ENGLAND SUGGEST THAT IT WOULD PROBABLY BE UNDESIRABLE FOR

THE HONG KONG BANK TO BE LEFT AS THE SOLE NOTE-ISSUER.

HOWE

OCMIAN 2480

NNNN

YYYY

ΜΑΙΝ

LIMITED

HKD

DR. WILSON

COPIES TO:

BlENGLAND

MR ELSTON, BIEN

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