TNAG-2474-FCO40-3604-Business-matters-in-Hong-Kong-acquisition-of-Midland-Bank-by-1992 — Page 62

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FM PEKING

TO PRIORITY F CO TELNO 808

OF 090901Z JUNE 92

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Haks loźle

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MOLIAN 1414

137

TOP COPY Q DIST?

AND TO PRIORITY DTI INTRA, HONG KONG, B T C HONG KONG

FCO FOR FED AND HKD

DTI FOR OT2/2D

SUMMARY

1

HONG KONG BANK UPDATES CHINESE ON JUNE TIMETABLE FOR COMPLETING MERGER WITH MIDLAND.

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2.

ANTHONY RUSSELL, MANAGER FOR CHINA OF HONG KONG AND SHANGHAI BANK, CALLED ON MINISTER ON 8 JUNE TO REPORT ON HIS LATEST CONTACTS WITH THE HONG KONG AND MACAO AFFAIRS OFFICE AND THE PEOPLE'S BANK OF CHINA (PBOC) FOLLOWING THE WITHDRAWAL OF LLOYDS FROM THE TAKEOVER BATTLE FOR MIDLAND.

3.

RUSSELL HAD SPOKEN TO CHEN ZUO'ER, DEPUTY DIRECTOR, HKMAO. THEIR PREVIOUS MEETING HAD BEEN VERY TOUGH, BUT THIS TIME CHEN WAS POLITE. RUSSELL HAD EXPLAINED THE REASONS FOR HSBC'S

INCREASED BID:

TO REFLECT THE FACT THAT MIDLAND HAD RAISED POUNDS 200 MILLION BY THE RECENT SALE OF THOMAS COOK

TO GIVE INSTITUTIONAL INVESTORS A MORE CASH-UNDERWRITTEN POSITION ON LOAN STOCK

TO GAIN THE TACTICAL BENEFIT OF BRINGING FORWARD THE ACCEPTANCE

DATE

TO LIMIT THE OPPORTUNITY FOR LLOYDS TO CREATE CONFLICT BY BUYING LOW-PRICED MIDLAND STOCK ON THE OPEN MARKET.

HE HAD ALSO EXPLAINED THE TIMETABLE FOR THE TAKEOVER FOLLOWING LLOYDS' WITHDRAWAL, VIZ, A MEETING OF HSBC SHAREHOLDERS IN HONG KONG ON 9 JUNE AND AN ACCEPTANCE DEADLINE OF 25 JUNE FOR MIDLAND SHAREHOLDERS.

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