C D Powell Esq
10 Downing Street
London
SW1A 2AA
Cay
Ime
MR. HENRY REPLACK: HONG KONG,
Thank you for your letter of 2 May enclosing a letter the Prime
Minister has received from Mr Henry Keswick about the difficulty
being experienced by Jardine Fleming in obtaining a full banking
licence in Hong Kong. I enclose a draft reply from the Prime
as you asked Minister which has been prepared in consultation with the Treasury and the Bank of England as well as the Governor of Hong Kong.
It may be helpful to set out the background to this case in
Dome detail. Banking licences in Hong Kong are granted at the
discretion of the Governor-in-Council (ie the Governor acting in
consultation with the Executive Council), in accordance with the
provisions of the Banking Ordinance. No statutory licensing
criteria are laid down in the Banking Ordinance. But for many years
the detailed criteria have been publicly available.
Entry into the Hong Kong banking sector is open to both overseas banks and local deposit taking institutions. Two different
sets of criteria apply to each category. Banks incorporated outside
Hong Kong are required to demonstrate that they are above a certain
size (currently this means that they they must rank in the world's
300 largest banks), and that they are properly supervised. For
locally incorporated applicants, much lower size criteria apply.
addition to meeting these, the local applicant must have been a
deposit taker for at least ten years and be of good standing. Also,
crucially in the case of Jardine Fleming, to be treated as a local company, the applicant has to be "predominantly beneficially owned by Hong Kong interests".
The origin of this provision was principally to prevent overseas banks incorporating local subsidiaries in order to
circumvent the size criterion, while leaving open the realistic
In
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