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from under EC jurisdiction and that the Lloyds bid merits being referred to the MMC. The Chinese have fired further warning shots about HSBC keeping its "chair" in Hong Kong, through the Governor of the Bank of China in talks with
Lord Wilson. Lord Wilson was guarded in his reply.
HMOCS
3.
The consultations in Hong Kong were difficult. There was no detailed discussion of our compensation/incentive
proposals: the HMOCS Association stuck to their claim for retirement in 1997 with early payment of pension (and full compensation) and said that our proposal offered no fair basis for discussion. We succeeded in tabling our proposal and pressed them hard to respond (which may help our credibility with the Treasury), but we still did not manage to elicit detailed comment. Nonetheless the Association
made some new points, and we were able to disengage without
a break-down.
4.
We are now considering the way ahead: the ODA believe that we shall have to move significantly towards the HMOCS position. As a first step we have briefed the Secretary of State to urge Mr Portillo to reply soon to his letter on sterling safeguards.
Visit by Ms Emily Lau
5.
Ms Lau's call on Mr Goodlad on 14 May was satisfactory.
Nox.
N J Cox
MAXALV/2
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