SIR William Purves, chairman of HSBC Holdings, is counting the days before Hong Kong's handover to China, but this should not imply a nervousness about the territory's future. During an interview in Hong Kong yesterday, he gave a resounding vote of confidence on the territory's future. While acknowledging that Hong Kong had 'lost some of its effervescence', he dismissed much of the apprehension as understandable but unnecessary. 'There are major changes taking place in 600 days, or whenever it is,' Sir William said. 'It is not surprising that when the [Hong Kong] economy is slower, people are showing concern. There are also the political debates, which have been causing some concern. 'My own view is that Hong Kong is remarkably well placed. But the whole world is uncertain; there are problems in every corner of the world.' Calling on his long experience in Hong Kong, he felt it had endured more difficult periods in its history, citing the riots of 1967 as being a more trying test for survival. 'Hong Kong has been through greater change and greater uncertainty in my view,' he said. 'Those people here in 1967 were facing greater uncertainty than those who will be here in 1997. 'Hong Kong has always been based on business and business development. If business between China and Hong Kong is good, that is the bulwark for the future of Hong Kong.' Hong Kong had less to be concerned about than other parts of the world. 'The perception is that things are not good. People are worried about the future, but there is more certainty here than in many parts of the world.' He singled out Japan as a particular area for concern, but also highlighted the 'turmoil' of the United States banking and financial system and the political rifts across Western Europe. 'If you look at Japan, there is something pretty close to a financial crisis and the economy is not in good shape,' he said. 'The Middle East remains a troubled area; Europe is more divided than united. 'We've just had a financial crisis in the US with half the government sent home and talk about the US defaulting; the UK is facing an almost certain change of government.' The assurances given by Beijing on Hong Kong's autonomy added to Sir William's reasons for confidence. He was told during discussions with leading financial and government figures in China, that the territory would remain an important port and financial centre after the takeover. 'The proof of the pudding will be when we come to it. But we should take the medium view,' he said. 'Twenty months is short time and when the changes have taken place I believe people will be looking at the continuing opportunities in Asia and in Hong Kong.' On the potential challenge that Shanghai poses to Hong Kong, Sir William felt that China provided ample scope to sustain two large financial centres. Although there were 'those who want to see Shanghai grow', Hong Kong would rise to meet the challenges posed after the union with China. 'Shanghai will grow in importance, but I do not see it as a threat to Hong Kong. There is room for both.' Hong Kong's future depended on its ability to remain competitive and efficient. 'The much greater danger to Hong Kong is if we not not remain competitive, and that is a much bigger worry. Hong Kong has become very expensive.' He said inflationary pressures were helping to price Hong Kong out of international markets and he called for sterner efforts to slow its present rate. The decline in rent and property prices of the past two years had been 'healthy'. After rising excessively, he believes they have stabilised. 'I don't see a property crisis as we have seen in other cities,' he said. 'I guess what I mean is that if Hong Kong can keep its nerve, the future looks to be good. I see far fewer risks to stability in Hong Kong than I can in some other countries.' In banking, Sir William said there was a lot more to be certain about in Hong Kong than elsewhere. 'There is turmoil in the US banking industry and there is change in the banking scene in the UK,' he said. From the standpoint of rumours and speculation surrounding Hongkong Bank and possible plans for a new acquisition, he said: 'If I read the press there is nothing that I'm not buying. We do not have a shopping list.' He said the bank had looked at more than 100 opportunities this year and pursued none of them. 'It seems that everyone thinks I've got a big cheque book at this moment. I may have a cheque book but we're not going to be signing cheques for big numbers,' he said. However, he repeated his interest in expanding in asset management in North America. Turning to the subject of promoting Hong Kong-Chinese staff, Sir William said it was one of the regrets of his tenure at Hongkong Bank that more localisation had not taken place. He felt progress to achieve a greater balance had been made recently, citing the appointment of Vincent Cheng to the main board of the group as evidence of success. 'In Asia we have perhaps been perceived as a British bank. I hope today and believe today that we are seen as an international bank,' Sir William said. Following recent banking and securities scandals, he felt there was the risk that the business would be 'saddled' with excessive regulation. 'You don't prevent Daiwa [at the centre of a US$1.1 billion bond fraud scandal] by getting another piece of paper filled in with new figures,' he said. 'You make sure management is on top of what they are doing. It's judgment, it's finding out, it's keeping your ear close to the ground. The fault lies with the management of the organisation. 'Where there is money there is always going to be the temptation for fraud. What you have to do is make sure management finds out very quickly. There is always going to be someone tempted to do something.' Sir William said there had been no major progress in negotiations with the Shanghai authorities on the bank's stated hopes to re-occupy its old premises as a tenant on the Bund. Proposals had been made to the authorities which had 'not been rejected and not been approved'. He noted that bank reform in China had been slow and felt the reason was that it had not been opened to sufficient competition. 'The authorities in China are well aware of the need to have more modern banking systems,' he said. 'The young Chinese banking officials I have met recently are perfectly capable of change. The system needs attention. It is not something to cure overnight.'