TNAG-2245-FCO40-3228-Bank-of-Credit-and-Commerce-Hong-Kong-Limited-(BCCHK)-1991 — Page 180

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in the conduct of its business or, even, as an ultimate step, to assume control of the business, either directly or indirectly. My memo of 5 July is at Enclosure IA. The Financial Secretary wrote back to advise me that he ccnsidered that it was in the public interest for me to exercise the powers granted to me under section 2 of the Ordinance in relation to BCCHK

(and BCCIFI).

His letter of 5 July is at Enclosure IB.

The decision to allow the bank to open on Saturday

12. Initially, it had appeared that any action by the Bank of England and other supervisors in respect of BCCI SA and BCCI Overseas would be delayed for a week or more. This timetable shortened during the week, but it was not until 6:00 pm Hong Kong time on Friday, 5 July that it was known that the Bank of England was to make an announcement of the problems with the rest of the BCC Group and the action to be taken at 8:00 pm Hong Kong time. It was only at this stage that we received a text of the announcement that was to be made. The Secretary for Monetary Affairs and myself each rang the Bank of England on Friday evening to ask whether the announcement could be delayed or whether the text of the announcement could be revised to make it clearer that BCCHK was not involved in the problems of the rest of the Group. This was not possible.

13. A decision had to be taken at this point as to whether

BCCHK should be allowed to open on Saturday morning. My guiding principle in making this decision had to be what was in the best interests of depositors of BCCHK and what would best preserve the general stability of the Hong Kong banking system. With this in mind, I considered the options.

14. In favour of allowing the bank to remain open were the

#ollowing:

(1)

BCCHI was a company incorporated in Hong Kong with its own management and balance sheet here. It was a separate legal entity from those parts of the BCC Group where the problems had occurred. It was not a branch of BCCI SA or BCCI Overseas as was the case in many other countries where BCC operations were closed down. Its financial exposure to other parts of the BCC Group had been substantially reduced and was running at the low level referred to in paragraph 7 above;

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