Hang Seng Bk re Industrial Bk

HSBC Holdings PLC
17 December 2003

The following news release was issued today in Hong Kong by Hang Seng Bank
Limited, a 62.14 per cent owned subsidiary of HSBC Holdings plc.

                   Hang Seng Bank Limited Signs Agreement to

                Acquire 15.98 per cent of Industrial Bank Co Ltd

Hang Seng Bank Limited has today signed an agreement with Industrial Bank Co
Ltd, a mainland China commercial bank, to acquire 15.98 per cent of Industrial
Bank's enlarged capital for a total consideration of RMB1,726 million
(approximately HK$1,626 million) in cash. This makes Hang Seng Bank the largest
foreign investor in a mainland China bank both in terms of invested capital and
percentage of shareholding.

The agreement is subject to the approval of the regulatory authorities and the
passing of the relevant resolutions regarding the transaction at a shareholders'
meeting of Industrial Bank.


Hang Seng Bank is the first foreign bank to acquire more than 15 per cent of a
mainland bank, following the China Banking Regulatory Commission's announcement
in early December that the largest shareholding that a foreign bank can own in a
mainland bank is to be raised from 15 per cent to 20 per cent. Hang Seng Bank
will become Industrial Bank's second largest shareholder.

Industrial Bank is a national joint-stock commercial bank on the Mainland. At
present, the Fujian Provincial Government holds a 34 per cent stake in
Industrial Bank and is its largest shareholder.

Headquartered in Fuzhou, Industrial Bank has a nationwide network of over 240
outlets. At 31 December 2002, Industrial Bank had total assets of RMB189.66
billion based on International Accounting Standards (IAS).

The subscription price per share of RMB2.70 represents 1.8 times the net asset
value (after dividend payment for 2002) of Industrial Bank as at 31 December
2002, which was prepared in accordance with IAS.

GIC Special Investments in Singapore and International Finance Corporation
(IFC), a member of the World Bank Group, will also take up 5 per cent and 4 per
cent of Industrial Bank's enlarged capital respectively.

The signing ceremony hosted by the Chairman of Industrial Bank, Mr Gao Jianping,
was held in Fuzhou.

The agreement stipulates that Industrial Bank will form joint-ventures with the
foreign investors in the development of credit card and unsecured personal loan
businesses when the relevant regulations allow foreign banks to operate these
businesses on the Mainland.

Mr Vincent Cheng, Vice-Chairman and Chief Executive of Hang Seng Bank, said:
"Hang Seng Bank is very pleased to establish a strategic partnership with
Industrial Bank. The signing of this agreement is an important step forward for
Hang Seng Bank and significantly increases the opportunities to build our
business on the Mainland, following the gradual liberalisation of the mainland
financial markets since China joined the WTO."

Mr Gao Jianping, Chairman of Industrial Bank, said: "The investment by foreign
partners in Industrial Bank will enhance the bank's financial position. It is
also in line with the central government's commitment to liberalise the
financial markets and strengthen the corporate governance, risk management and
business development of mainland banks through foreign investment in these
banks.

"We are honoured to cooperate with the world class Hang Seng Bank, GIC and IFC
and to leverage on their experience to enhance the corporate governance of
Industrial Bank," he said.

HSBC and BOC International are the financial advisors of Hang Seng Bank and
Industrial Bank respectively.

Notes to editors:

1. Industrial Bank

Established in 1988, Industrial Bank is one of the 10 national joint-stock banks
in China. It is headquartered in Fuzhou and has more than 240 outlets
nationwide. Industrial Bank had total assets of RMB189.66 billion at 31 December
2002 and net profit of RMB890.2 million in 2002, based on International
Accounting Standards (IAS). The bank's non-performing loan ratio (based on the
five-tier classification standard) was 3.47 per cent as at 31 December 2002.
Industrial Bank was ranked 273rd in The Banker magazine's Top 1,000 Banks of
2003.

2. Hang Seng Bank

Founded in 1933, Hang Seng Bank is a principal member of the HSBC Group and the
second largest listed bank in Hong Kong in terms of market capitalisation. It
operates 155 branches and automated banking centres in Hong Kong; and a network
of five branches (in Shanghai, Guangzhou, Shenzhen, Fuzhou and Nanjing), a
sub-branch (in Shanghai) and two representative offices (in Beijing and Xiamen)
in mainland China. The bank also has a representative office in Taipei. With
consolidated assets of HK$482.3 billion at the end of June 2003, the bank
reported a profit attributable to shareholders of HK$5.02 billion for the first
half of 2003, and HK$9.92 billion in 2002. For further information on Hang Seng,
please visit the bank's website at www.hangseng.com.

3. GIC Special Investments

GIC Special Investments (GIC SI) is the private equity investment arm of GIC, a
fund management company established in 1981 to manage the foreign reserves of
Singapore by investing globally. GIC SI manages an international portfolio of
investments comprising venture capital and private equity funds, and direct
investments. Reflecting its global orientation, GIC SI operates out of offices
in key financial centres around the world and is headquartered in Singapore. GIC
SI began investing in China in the early 1990s and set up an office in Beijing
in 1999. GIC SI is now one of the most active foreign financial investors in
China, with over 20 investments which include well-known companies such as CICC,
China Mobile, CNOOC Taikang and Lining. GIC SI's investment philosophy is to
invest in successful companies and become a long-term partner for these
companies. Leveraging its global network and reputation, GIC SI will provide
help to its investee companies to expand their business and operations.

4. The International Finance Corporation

The International Finance Corporation (IFC) is the private sector arm of the
World Bank Group. The mission of IFC is to promote sustainable private sector
investment in developing countries, helping to reduce poverty and improve
peoples' lives. IFC finances private sector investments in the developing world,
mobilizes capital in the international financial markets, helps clients improve
social and environmental sustainability, and provides technical assistance and
advice to governments and businesses. Since its founding in 1956, IFC has
committed more than US$37 billion of its own funds and arranged US$22 billion in
syndications for 2,990 companies in 140 developing countries. IFC's worldwide
committed portfolio as of FY03 was US$16.7 billion for its own account and
US$6.6 billion held for participants in loan syndications.


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