TNAG-1487-FCO40-2044-Hong-Kong-banking-Banking-Bill-1986-1986 — Page 233

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HMLNAN 4611

CONFIDENTIA FCOLN

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CONFIDENTIAL

FM HONG KONG

TO PRIORITY FCO

TELNO 1052

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NO DISTRIBUTION

Mr Hugh Str

I have left a message

for Un Kent to sing.

он

14/4.

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PERSONAL FOR HUM FROM GOVERNOR

STANDARD CHARTERED BANK

1. THE RECENT BID BY LLOYDS BANK FOR THE STANDARD CHARTERED BANK HAS RAISED SOME WARNING FLAGS HERE. AS YOU KNOW, THE LATTER ISSUE ABOUT 20 PERCENT OF HONG KONG BANKNOTES AND HAVE DONE SO FOR MANY YEARS. THERE MIGHT WELL BE A REACTION LOCALLY IF LLOYDS BANKS WERE TO SEEK TO TAKE OVER THIS FUNCTION. MOREOVER, THE WHOLE QUESTION OF THE BANK OF CHINA AND THEIR ASPIRATIONS TO ISSUE BANKNOTES WOULD ARISE.

2. IT MAY BE THAT THE LLOYDS BID WILL NOT SUCCEED. FURTHERMORE, SIR LINDSAY ALEXANDER, THE DEPUTY CHAIRMAN OF LLOYDS, HAS RUNG THE FS TO ASSURE HIM THAT IF IT DID, THE ONLY CHANGES PROPOSED WOULD BE A MERGER OF HEAD OFFICE STAFF IN LONDON AND THAT STANDARD CHARTERED'S OPERATIONS AT THE WORKING LEVEL WOULD BE UNAFFECTED. BUT THIS MIGHT NOT WORK OUT QUITE LIKE THIS, AND THERE IS ALSO THE POSSIBILITY THAT ANOTHER BANK, PERHAPS A FOREIGN ONE, MIGHT MAKE A SUCCESSFUL BID.

3. AT ANY RATE, YOU SHOULD BE AWARE AT AN EARLY STAGE OF OUR CONC- ERNS. I SHOULD BE GRATEFUL IF YOU WOULD PASS THEM ON TO THE BANK OF ENGLAND AND LET US KNOW IF THEY HAVE ANY PRELIMINARY REACTIONS.

YOUDE

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HMLNAN 4611

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HKK 102/$

RECEIVED A REGISTRY

- 6 MAY 1986

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TAB 615.

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Mr. Elsti *4265