TNAG-2754-FCO40-3971-Business-matters-in-Hong-Kong-acquisition-of-Midland-Bank-by-1993 — Page 20

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The Chinese had said quite openly that Samuel Montagu not lead the issue because of political difficulties with HSBC.

6. Since HSBC had moved to London, responsibility in Beijing had moved from the Hong Kong and Macao Affairs Office to the Foreign Ministry under Qian Quichen. The Chinese Ambassador to London had told Sir William that the Hong Kong and Macao Affairs Office had also been entirely transferred to the Ministry of Foreign Affairs.

7.

China mattered to HSBC. Sir William Purvis said that

The Economic Secretary asked how much business with Hong Kong [and]?

the

Hong Kong business was a very important part of the Group. Although the Group's assets in Hong Kong had been reduced, Hong Kong was still a vital profit centre. HSBC was the largest

bank in Hong Kong;

had quasi central bank responsibilities for example, it was the main note-issuing bank.

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and it

8. As for China, HSBC had done more there than any other financial institution. The extent of China's importance in the future would depend partly on whether China chose to open up its banking sector. It would obviously be a huge potential market for

banks. HSBC did not expect to be able to get back into retail banking in China in a big way but if anyone could, HSBC could.

9. If HSBC were to remain important in China after 1997, it had

to have good and close links with China. If it did not succeed,

that would weaken its position throughout South East Asia, and

indeed in Australia and New Zealand. It was important to have a

strong bank in South East Asia to counterbalance the Japanese

banks.

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