RE: Legal Opinion regarding transfer of existing business of BANK 1 in China to a new and wholly owned banking subsidiary Bank 1.
We refer to your letter no. …………… dated February 28, 2007 on the above subject.
On perusal of your letter, it appears that Bank 2 (“BANK 2”) have correspondence banking arrangement relationship with BANK 1, London covering the group offices in China to facilitate reciprocal international foreign exchange transactions including LCs, Guarantees, Documentary and clean collections, etc.
BANK 2 have received a SWIFT MT 999 dated February 9, 2007 from Bank 1, Zhuhai Branch, China advising that they are establishing a new, wholly-owned banking subsidiary, Bank 1and intends to transfer all of the assets and liabilities of its existing branches or subsidiary branches in China, including their rights and obligations in all trade transactions, to this new entity. The effective date to be determined and announced later, notwithstanding any provisions in the documents in connection with the export bills transactions. A public announcement in any major newspaper in China, confirming the date on which the assignment and transfer will take effect shall constitute sufficient notice to BANK 2 of the assignment and transfer having taken effect.
In these circumstances you have requested our legal opinion as to whether BANK 2 should agree to this assignment.
Whether BANK 2 should allow such assignment is a commercial decision to be decided by BANK 2. In our opinion there appears to be no legal complication if BANK 2 agrees to the assignment by Bank 1 of all their rights and obligations in all trade transactions to Bank 1. If BANK 2 decides to approve such assignment, then before agreeing BANK 2 should ask Standard Chartered Bank, China to provide all related documents evidencing the transfer of all the assets and liabilities, including their rights and obligations in all trade transactions to Bank 1.
Should you have any further query, do not hesitate to revert to us.
For: “The Lawyers & Jurists”