Miss Mags SeR17 17/1,
Ms Majud Am14/1
Mr Stony no Farvess
14/1,
Mr Paul, HKD
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HKC 182 /2
212
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FROM:
H Ll Davies
Far Eastern Department
DATE: 14 November 1990
CC:
Mr McLaren
Mr Burns
ERD
Economic Advisers COMED
PADS: A BANKER's VIEW
1.
As I mentioned to you, I was lunched by Mr Peter Hurst, Regional General Manager Far East, Nat West Bank, on 9 November. We covered a lot of ground about prospects for China, in particular South China (Mr Hurst knows Hong Kong reasonably well and was based there for some years in the early / mid 1980s). Nat West are to part-finance Gordon Wu's Shenzhen / Canton toll road.
2.
The point of interest to you was Mr Hurst's extremely bearish view of the financing possibilities for the PADS project unless it attracted very clear support from China. He spoke of looking for a 50% loan or equity participation from China before being able to recommend it to his credit committee. This extreme position did admittedly surprise his colleague and Mr Hurst agreed on reflection that it was expecting too much; what was evident to him however was that the big lenders would remain very chary unless Peking made its support for the project more than crystal clear. He pooh-poohed the Merchant Banks who were telling the HKG that they could fix the finance. These Banks depended on the Clearers and other big international lenders for funds, and the latter were looking askance at Hong Kong China risk at present. Mr Hurst did not however subscribe to those who were talking of Hong Kong now being China risk. China risk was a meaningless term; everything depended on projects, location and guarantor; there were many types of China risk. But, in a project as big as PADS and with its time span, it was inescapable that China's attitude loomed as the dominant factor. In his view, without the strongest possible blessing from Peking, the project was not financeable
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