change was to help institutions such as Jardine Fleming to enhance
their international status with a view to improving their access to
markets both in Hong Kong and overseas.
Jardine Fleming's application made it clear that they were
seeking a banking licence in order to confer enhanced status on the
group as a whole, rather than to develop as a commercial bank, for
which they do not have the expertise. In other words they
demonstrated no clear need for the wider deposit-taking power which
a full banking licence would have conferred.
The present position is that ExCo have not formally rejected
Jardine Fleming's application. The application lies on the table.
Informally it has been put to Jardine Fleming that they might wish
to let matters rest while ExCo see how the new "three-tier" system,
with its provision for institutions like Jardine Fleming to call
themselves merchant bank, works in practice. Jardine Fleming
locally have made it clear that they see no problem with this. The
Hong Kong authorities have also assured Jardine Fleming that they
stand ready to intercede on their behalf in any case where they feel
that their lack of full banking status is hampering them
internationally.
So far they have not taken up this offer.
I am copying this letter to John Gieve (HM Treasury) and to
Paul Tucker (Bank of England).
PRIVATE SECRETARY
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