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from BCC Holdings SA and BCCI, had been involved in the fraud discovered here and in the US and seemed financially sound. Trading on Saturday was normal: although Hong Kong
Government told the Bank to take certain defensive measures
designed to limit any loss of liquidity which might occur.
4.
Over the weekend VISA decided to seize BCC (HK) cards if
used and no clear support was forthcoming from Abu Dhabi. By Sunday night it had become apparent that if the bank
opened on Monday there could be a massive and unsustainable
run on deposits. The Hong Kong authorities therefore
decided it had no choice but to close the Bank.
5.
Hong Kong depositors with BCC (HK) are understandably distressed that their savings are inaccessible, although they have received 25% of their net credit balances and can expect to receive considerably more. Several groups have expressed interest in buying the Bank and it is not clear which one Mr Vaz is referring to. The Hong Kong authorities are in discussions with the groups to see whether any of the proposals are viable and acceptable.
6.
Regulation of the Banking Industry in Hong Kong is a matter for the Hong Kong Government. Hong Kong has long managed its own economic and financial affairs. This is
therefore not a matter which we or HMG have or should take a view on.
7. Hong Kong recognise however that it is sensible to give Mr Vaz every assistance. They were separately asked by BCC (HK) shareholders to meet Mr Vaz and the Commissioner of Banking has agreed to do so on Saturday 24 August.
Ull ustane.
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M V Stone
ROFATB/2
If the Minister of State is content, we should fox the reply to i Vaz in Abu Dhabi today or tomorrow
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