TNAG-2245-FCO40-3228-Bank-of-Credit-and-Commerce-Hong-Kong-Limited-(BCCHK)-1991 — Page 151

Pa

MIB 102/3

Мив

2

1991

Foreign & Commonwealth

Office

London SW1A 2AH

ATTACHARY

From The Minister of State

Thank you for your letter of 7 August. You ask for our reactions to the article you enclosed, by Frank Ching which appeared in the South China Morning Post on 19 July on confidence in the banking authorities in Hong Kong following the Bank of Credit & Commerce (Hong Kong) (BCC (HK)) saga.

The BCCI affair, and its ramifications around the world, have caused problems and hardship in many places. Unfortunately Hong Kong has not been immune. Regulation of banks in Hong Kong is a matter for the Hong Kong Government, and it would therefore be inappropriate for me to comment on the article and the Hong Kong Government's handling of the situation. However, since the article was published on 19 July, the Hong Kong Government have released a report by the Commission of Banking to the Governor of Hong Kong on the events that lead to the various decisions that he and the Financial Secretary made. I am enclosing a copy of this for your information.

Also since the report was written, there have been runs on two major banks in Hong Kong Citibank and the Standard Chartered Bank. I am pleased to say that, after statements of support by the Hong Kong Government and a joint statement by the Hong Kong and Shanghai Bank and the Bank of China, these runs have now ceased and deposits are climbing again.

Yours sincerely

lam full

THE EARL OF CAITHNESS

(Approved by the Minister and

signed in his absence)

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