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HWB 182/1
From:
RA Burns
cof
Mr Co HKD
ос Ли Подерватот
This formess
Date:
30 October 1991
CC: Mr Davies, FED
(You have affed
a tel./
SCHRODERS
1.
an
Y/xi
29
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Thank you for your note of 28 October and for that by Mr Davies too.
2. We had quite a long discussion about the Hong Kong Airport. Schroders are most impressed by Mr Richard Allen, the Chief Executive for the Airport Authority. They are much more critical of the Hong Kong Government, both for mishandling the overall relationship with China (an old story, which we went over at length) and for their very fuzzy approach to the financing of the fixed link.
3.
Not surprisingly, as financial advisers to the AJC, Schroders shared their criticism of the HKG for failing to respond to the AJC's attempt to make a pre-emptive bid last year. They say they were given a firm encouragement to do so in Hong Kong, but that it was EXCO which rebuffed them. Hence, for some months, their disillusionment. They are now firmly re-engaged, but gave an interesting view on the British response to the HKG's request for a zip-on financial package for the bridge. In their view, all the key parameters (value of concession, through-put of traffic, etc, etc) are too vague, uncertain, or yet to be decided for any British (as opposed, say, to a French) bank to want to be specific. Schroders will in fact shortly be talking to the HKG at a senior level, but feel that any financial package now will fail if it is too specific. What they want to do is get engaged in a negotiation with the HKG, out of which greater clarity will eventually emerge.
4. But, secondly, Schroders say that there is a great deal of doubt in banking circles about committing themselves to Hong Kong. They are at present approaching a wide range of European, US and Japanese banks, but it is uphill work. The Japanese, in particular, are very cautious now in the absence of an external (ie, non-Hong Kong) guarantee. problem is, in essence, the China factor and lack of confidence that Hong Kong will survive unscathed after 1997.
5.
The
In answer to a direct question, they confirmed that the AJC might be ready in the fullness of time to contemplate
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