TNAG-2621-FCO40-3812-Visits-by-Alastair-Goodlad--Minister-of-State-for-Foreign-an-1992 — Page 39

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away from other infrastructure or social spending. These are all issues for the Hong Kong Government to tackle, but it will be appreciated if the Minister shows an interest in them. They will be described more fully in the mood

telegram which the Governor will send just before the

visit.

HSBC/MIDLAND

13.

The Chinese have been remarkably restrained in public, although they have recently fired more warning shots about HSBC's "chair" remaining in Hong Kong. The move of "mind and management" to the UK will continue to need very

careful handling: a calm Chinese response will be important

in keeping the banking system stable in Hong Kong in the

long term. The Office of Fair Trading will soon make its

recommendations to the President of the Board of Trade on

HSBC's proposed merger with Midland Bank and the Lloyds counter "bid". It looks unlikely to recommend

interfering with the Commission's review of

•

HSBC/Midland. Lloyds tactics now are to emphasis the Hong Kong risk and "Chinese supervision" aspects, which could be unsettling in Hong Kong. Prospects for the HSBC bid still

look good.

Press

14.

Ms Everett will accompany us, and Mr Osborne from BTC

will join the party in Hong Kong. We can decide the precise

nature of the press contacts on the final day when we are in Hong Kong. But I recommend that the Minister do plenty of

RB3ACW/8

CONFIDENTIAL