TNAG-1769-FCO40-2523-Hong-Kong-mergers-involving-banks-and-other-financial-instit-1988 — Page 107

CODE 18-77

NOTE FOR THE FILE

Радрим

4/7

RANIER INTERNATIONAL BANK BILL 1988

Reference......

CC:

Mr Morris, HKD

HKC 102/3

24

1.

Mr B Nicholson of Linklaters and Pains, Hong Kong telephoned me at home on 2 July 1988 about the formula which we had proposed in our telno 1734. I did not have the papers with me so had to deal with the matter from

19

memory.

2.

Mr Nicholson was aware of the need to establish a complete nexus with Hong Kong as regards all the assets and liabilities which were to be subject to the Bill. He emphasised that the Hong Kong end of the Ranier Bank was run as a separate concern with separate accounts and, so far as nexus was concerned, was a Hong Kong entity in all but "legal fact". There are indeed both customers and lenders whose contract with the bank would not be subject to Hong Kong laws, but it was all Hong Kong business.

3.

The

I said that it did not automatically follow that the business of the Hong Kong branches was to be equated with

There were possible distinctions. Hong Kong business. problem was that Ranier was not a Hong Kong bank; it was a foreign (US) bank. And both from the point of view on the limites

on colonial legislation, and because of the sensitivity of asserting extraterritorial jurisdiction in respect of the Americans, with whom we had a wide range of problems over extraterritoriality, I was concerned that the Bill could be attacked if it were to purport to deal with matters which could not be defended before a judge as being Hong Kong matters.

4.

After considerable discussion, I asked if the Hong Kong Attorney General had seen the Bill. He was required to certify that the Governor could properly give his consent to the Bill [this is of course subject to the question of reservation under Royal Instructions]. If he were prepared to certify the Bill on the basis that he had considered the extraterritoriality point and was both satisfied that the business of the Hong Kong branches constituted the nexus of Hong Kong business, and would be prepared to defend the Bill on that basis, I would be prepared to give further consideration to the point. I was not, however, committing myself to doing so; but the view of the Attorney General would have considerable weight. Mr Nicholson said that he would consult Mr Matthews on Monday morning and come back

to us.

/5.

- 1