Lloyds Bank PLC is unlikely to stop the parent of Hongkong and Shanghai Banking Corp. from getting preliminary Fed approval for its bid to acquire Midland Bank PLC, analysts said Tuesday.

"Common sense tells you that the Fed could have no conceivable objection" to the Hongkong and Shanghai bid, said Julian Robins, an analyst with Barclays de Zoete Wedd in London.

"Lloyds is clutching at straws," he said.

A Lloyds spokesman confirmed a report in the Financial Times Tuesday that the London-based bank last week submitted objections to the U.S. central bank over the request by Hongkong and Shanghai - a unit of HSBC Holdings PLC - for temporary Fed approval for its bid for Midland.

Issues of Marine Midland

Lloyd's is requesting a full-fledged examination by the Federal Reserve Board of HSBC's management of its U.S. unit, Marine Midland Banks Inc., before the Fed gives any approval for the Midland acquisition.

Under the Bank Holding Company Act, a foreign institution seeking to acquire another bank overseas can obtain temporary Fed approval to acquire the target bank's U.S. nonbanking units.

The approval is subject to a final Fed review, at which time the foreign bank may be required to dispose of any units it is not entitled to own under U.S. banking laws.

The Lloyds spokesman said the bank expected a Fed response to the request within a week.

Handful of U.S. Operations

However, analysts said Midland has only a handful of small operations in the United States and its merger with another bank is not likely to be of much concern to U.S. regulators.

"I don't think the Fed is going to be influenced by what Lloyds wants or not," said Keith Brown, a bank analyst in London with S.G. Warburg.

Midland Bank, London, has approximately $115 billion in assets, Lloyds has approximately $106 billion, and Hongkong and Shanghai nearly $150 billion.

Hongkong and Shanghai submitted a $6 billion bid for Midland in March. Lloyds last month upped the ante by putting in a competing bid that valued Midland at $6.7 billion.

Regulatory Hurdles

However, Lloyds has become increasingly frustrated by a series of regulatory hurdles raised to its own bid for Midland and its inability to slow down Hongkong and Shanghai's acquisition effort.

The British government last week referred Lloyds' bid to the country's Monopolies and Mergers Commission while exempting Hongkong and Shanghai from a similar study.

Hongkong and Shanghai has set a July 7th closing date for Midland shareholders to accept its bid, raising concerns at Lloyds that Midland shareholders might agree to Hongkong and Shanghai's offer out of fear that the commission might not approve the Lloyds bid.

"There's no way they can speed up its [the Monopolies commission] process, so the only way is to slow Hongkong's bid," said Barclays de Zoete Wedd analyst Mr. Robins.

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