Standard Chartered Bank, which may be the first note-issuing bank to face the Hong Kong Monetary Authority's new rule restricting foreign government ownership, intends to preserve its status, according to group chief executive Peter Sands. Temasek Holdings, the Singapore government's investment agency, has increased its stake in Standard Chartered six times this year to 17.22 per cent - very close to the 20 per cent threshold set by the HKMA in July. The authority has indicated that a bank that is more than 20 per cent held by a foreign government runs the risk having its right to issue banknotes in Hong Kong revoked by the de facto central bank. 'We would not want to lose our status as a note-issuing bank in Hong Kong,' Mr Sands (left) said in his London office. 'But we have not yet had the problem as Temasek's holding has not yet reached the threshold.' Banking sources have said the authority's new rules stemmed from fears that Temasek was increasing its holdings in Standard Chartered. Hongkong and Shanghai Banking Corp, Standard Chartered Bank (Hong Kong) and Bank of China (Hong Kong) are the three note-issuing banks in the city. Mr Sands refused to say if he would negotiate with Temasek about its acquisition plans, nor would he comment on whether he would request the HKMA to waive its rule. But he called Temasek's investment a good acquisition because it showed confidence in the bank's growth. Mr Sands noted Standard Chartered itself had pursued acquisitions, including last week's purchase of American Express' banking unit for US$860 million in cash and US$300 million in additional payments. 'We will continue to make acquisitions in two situations,' he said. 'We will use them to expand into new growth areas, or increase our capacity or talents.' He said similar acquisitions had led Standard Chartered to expand in Taiwan, while the American Express deal added to its clearing and private banking business. Acquisitions are also the way to expand in the mainland, where it owns 19.9 per cent of Bohai Bank in addition to its own 13 branches and 15 sub-branches in 15 cities. 'In China, we would like to focus on organic growth, but we would not rule out more acquisitions in the future when good opportunities arise,' Mr Sands said. Thomas Harris, vice-chairman of Standard Chartered, said the lender was not yet interested in buying a mainland state-owned bank because of the 20 per cent stake limit and the prohibition from having management control. In Britain, Mr Harris said the bank had no interest in taking over troubled Northern Rock. The mortgage lender suffered a bank run last week when depositors withdrew money in panic after the institution said it faced liquidity problems stemming from the US subprime loan crisis. The crisis was resolved on Wednesday when the Bank of England offered an extra #10 billion (HK$156.39 billion) in three-month loans to Northern Rock. 'We are definitely not interested in buying a stake in Northern Rock,' Mr Harris said. 'Standard Chartered has no direct exposure to subprime mortgages and we are not hurt by the subprime crisis. We do not consider a mortgage lender like Northern Rock as suitable for our business portfolio.'