CONFIDENTIAL
077206
MDHIAN 9853
OF THE LICENSING CRITERIA HAD BEEN COMPLETED.
8.
ALONG WITH JF AND CO'S APPLICATION, EXCO CONSIDERED A SIMILAR APPLICATION FROM WARDLEY LIMITED, THE MERCHANT BANKING SUBSIDIARY OF THE HONG KONG AND SHANGHAI BANK. IT HAS SIMILAR DEPOSIT-TAKING STATUS TO JF AND CO. THIS APPLICATION WAS MADE PARTLY FOR DEFENSIVE REASONS, THE TWO COMPANIES BEING CLOSE COMPETITORS.
9. WERE EXCO TO HAVE GRANTED A FULL LICENCE TO WARDLEY, THERE WOULD HAVE BEEN A DEPARTURE FROM ANOTHER PUBLISHED LICENSING CRITERION - THAT AN APPLICANT SHOULD NOT BE A SUBSIDIARY OF AN EXISTING LICENSED BANK. CONSEQUENTLY EXCO DECIDED NOT/NOT TO REACH
A DECISION ON THE WARDLEY APPLICATION EITHER.
10. THE REVIEW OF THE LICENSING CRITERIA WAS COMPLETED IN JANUARY THIS YEAR.
11.
STRICTLY FOR YOUR OWN INFORMATION AND NOT/NOT FOR DISCLOSURE TO JF AND CO, THE ADMINISTRATION, TAKING INTO ACCOUNT THE ORIGINAL PURPOSE OF EXCLUDING SUBSIDIARIES OF OVERSEAS BANKS FROM LICENSING, RECOMMENDED A SIMPLIFICATION OF THE CRITERIA, WHICH WOULD HAVE ALLOWED JF AND CO TO MEET THE TESTS IF SUBSEQUENTLY THE APPLICATION WAS RE-PRESENTED TO EXCO. THE ADMINISTRATION ALSO RECOMMENDED THAT THE CRITERION DEBARRING SUBSIDIARIES OF LICENSED BANKS NO LONGER
HAD ANY LOGICAL BASIS, GIVING MODERN TRENDS OF SPECIALIST BANKING UNITS DEVELOPING WITHIN BANKING GROUPS. HOWEVER WHEN EXCO CONSIDERED THE GENERAL POLICY, THEY DECIDED THAT THE TIME WAS NOT RIPE TO MAKE ANY CHANGES TO THE CRITERIA UNTIL IT COULD BE SEEN HOW THE NEW CATEGORY OF RESTRICTED LICENCE BANK, WHICH WAS THEN ABOUT TO COME INTO EFFECT, WORKED OUT IN PRACTICE. IN PARTICULAR THEY NOTED THAT A KEY REASON FOR THE NEW CATEGORY OF RESTRICTED LICENCE BANK WAS TO HELP MERCHANT BANKS TO ENHANCE THEIR INTERNATIONAL STATUS, WITH A VIEW TO IMPROVING THEIR ACCESS TO MARKETS BOTH IN HONG KONG AND OVERSEAS. THEY WERE ALSO CONSCIOUS OF THE FACT THAT THE EXISTING LOCAL BANKS WERE ALL COMMERCIAL, RATHER THAN MERCHANT, BANKS AND SAW NO NEED AT THAT STAGE TO BROADEN THE CATEGORY.
12.
KESWICK'S LETTER STATES THAT JF AND CO IS A MERCHANT BANK. THE JARDINE FLEMING GROUP WITHIN WHICH THE APPLICANT JF AND CO LIES IS A MAJOR INVESTMENT FUND MANAGER. THE GROUP, THROUGH ITS SECURITIES SUBSIDIARIES, OPERATES INTERNATIONALLY. FOR EXAMPLE JF SECURITIES HAS A SUBSTANTIAL TOKYO SECURITIES OPERATION, INCLUDING, AS KESWICK NOTES, A SEAT ON THE TOKYO STOCK EXCHANGE. BUT JF AND CO ITSELF (EXCEPT ON A VERY LIMITED BASIS) HAS NO INTERNATIONAL BUSINESS,
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