TNAG-1896-FCO40-2690-Calls-on-Francis-Maude--Minister-of-State-for-Foreign-and-Co-1989 — Page 116

DAWAAL ( 2 )

5. Mr Maude asked whether the Association of Banks was capable with

dealing with the enlarged responsibilities. Mr Li said that he

thought the Association could. It was already a statutory body and

could fulfill the function of a lender of last resort, if it were

supported by the Exchange Fund.

6. Mr Maude asked whether Mr Li had discussed these matters with

the Chinese authorities. Mr Li said that he had not yet done so

because he thought initially this should be a matter from HMG/HKG. He felt that if HMG and HKG were able appropriately to amend this area of financial regulation this would be seen in Hong Kong as a confidence boosting measure to ensure financial stability there.

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7. Mr Maude said that he would need to reflect on the points made. He indicated to Mr Li that the next six months would be extremely

busy nationality, the Basic Law and Vietnamese boat people - but

after that he felt this would be a fruitful area for consideration.

He asked Mr Li whether this was an urgent subject. Mr Li said there was no burning urgency but that Sir Peter Middleton of the Bank of England would be available soon and he might be an ideal person to

head such a review. He did not feel that there was sufficient

expertise in Hong Kong to undertake such a review.

8. Mr Li then turned to the question of the retention of high calibre staff in the banking sector. He said that the French had

already given about 100 passports to key Hong Kong financial

personnel and that they were not required to live in France to take

up the passports. Mr Maude said that he understood this had

happened but that it was far easier for the French to do this than

it was for Britain and for other countries. Mr Li said that he

understood that the French were likely to make up to 2,000 more passports available and that this would lead to a significant drain

of Hong Kong personnel to French banks. He said that the Germans,

Belgians and Spanish were alive to this and were already considering measures. He understood that the Dutch had already introduced a

scheme similar to the French.

9.

Mr Maude said that this was useful information. He said that HMG were very actively working on the nationality scheme. Mr Li