TNAG-2528-FCO40-3698-Proposed-acquisition-of-Midland-Bank-by-the-Hongkong-and-Sha-1992 — Page 5

SECRET: LANDSMAN

COMMERCIAL IN CONFIDENCE

CALL ON SECRETARY OF STATE AT 1700 ON 5 MARCH 1992:

GALLEY/QUARTERDECK

POINTS

TO MAKE

Points to make

-

My door is always open to the Chairman of the Hong Kong

and Shanghai Bank. The Government have no doubt about the

Bank's vital importance to Hong Kong: economic, political and psychological. We also understand that you face very difficult commercial decisions. We hope it will prove possible to agree an approach which is in the interests of all parties.

These are obviously difficult times for Ministers to

grapple with these issues: Budget, Election etc. But we are

determined to fulfil our responsibilities. No question of playing for time. I briefed the Prime Minister orally last week and we are keeping him up to date.

Regret that the difficult issues about the prospective

ownership of the Midland Bank had to come to the fore at

this very awkward moment for the Government. However

grateful for your debriefing the Governor on your talks in Peking on 2 March. The Chinese seem to have appreciated

Doubt that we should pin much hope on

your briefing them.

the absence of an immediate negative reaction. Their

emphasis on a need to avoid disturbing confidence in Hong

Kong was the standard line, clear enough.

Understand your concern about the possibility of an acceleration of Sailmaker's plans, but no question of HMG

misleading you. The position remains as the Governor told you: the UK authorities will also need time to consider a

Sailmaker bid: the Bank of England, the Director-General of

SISABJ/1

SECRET: LANDSMAN

COMMERCIAL IN CONFIDENCE