TNAG-2474-FCO40-3604-Business-matters-in-Hong-Kong-acquisition-of-Midland-Bank-by-1992 — Page 108

1.81.

5.92

COMMERCIAL-IN-CONFIDENCE

Lloyds Bank

Lloyds Bank Plc

71 Lombard Street London EC3P 3BS

Deputy Chairman

Appendix 11

Strictly Private and Confidential

A.G. Atkinson, Esq.,

Office of Fair Trading,

Field House,

15-25 Bream's Buildings,

London EC4A 1PR.

19th May 1992

Dear Mr. Atkinson,

POSSIBLE BID BY LLOYDS BANK FOR MIDLAND BANK

I refer to our meeting of yesterday afternoon, and write to confirm our proposals in relation to the three areas of concern that were identified by you during the course of our discussion.

a)

b)

c)

Factoring

Lloyds Bank would, as previously indicated, be prepared to dispose of any interest in Griffin Factoring in the event of acquisition of Midland Bank.

Merchant acquiring

In the light of the Director General's concerns at the reduction from four to three principal UK providers of merchant acquiring, Lloyds Bank would be prepared to dispose either of its own interest in merchant acquiring or that currently provided by Midland Bank.

Branch disposals/small business lending

In the light of the further detailed work that has been undertaken since last Friday (which we shall be happy to disclose to, and discuss with, you further) and the views expressed by you and your colleagues at yesterday's meeting we would be willing to seek to negotiate an undertaking aimed at maintaining competitive choice in the provision of small business banking services outside urban areas. The undertaking would be based on our agreeing to sell a former branch of Midland Bank where this was necessary to ensure that within a distance of about 7 kilometres from that branch there was no reduction in competitive choice in instances where, at the date of the undertaking, choice was currently limited to 2, 3 or 4 banks.

Registered in England no 2065

Registered office:

COMMERCIAL-IN-CONFIDENCE

71 Lombard Street. London EC3P 3BS