CONFIDENTIAL
BCC (Hong Kong)
6. Mr Keith Vaz MP wrote to the Secretary of State on 18 August explaining that he would be going to Hong Kong to talk to BCC (HK) depositors. Mrs Chalker replied on 21 August and Mr Vaz has recently written appreciatively to follow this correspondence up.
7. BCC (HK) depositers have been vociferous in their complaints about the Hong Kong authorities handling of the closure of BCC (HK). Their main complaint centres around the Banking Commissioner's decision to allow BCC (HK) to open on 6 July and his statement that "the operations of BCC (HK) remain sound and viable." Two days later, the Hong Kong Authorities were forced to close the bank. The Governor of
Hong Kong has accepted that of all stages the Banking Authorities acted with the best interests of depositors in mind and there is no reason to suspect that the incident was technically mismanaged. However, the public presentation possibly left something to be desired.
8.
Efforts to find a buyer for the bank are looking more hopeful. The Hong Kong Chinese Bank (part of the Indonesian Lippo Group) have now signed a conditional agreement with the provisional liquidator giving them exclusive rights for eight weeks to negotiate to buy the bank. The success of this very much hinges on whether the Abu Dhabi Authorities are prepared to provide a satisfactory indemnity against any unrecoreded liabilities. Current indications are good but the Hong Kong Government still only put the chances of an eventual successful conclusion at "somewhat better than fifty-fifty.
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JA1AIF/3
CONFIDENTIAL
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