Hang Seng Mainland Investment

HSBC Holdings PLC
31 January 2008


The following is the text of an announcement made today by Hang Seng Bank, a
62.14 per cent owned subsidiary of the HSBC Group.


                      HANG SENG SIGNS AGREEMENT TO BECOME
                  LARGEST SHAREHOLDER OF A MAINLAND CITY BANK

Hang Seng Bank (Hang Seng) today signed an agreement to subscribe for 20 per
cent of the enlarged share capital of Yantai City Commercial Bank (Yantai City
Bank) in mainland China for a total consideration of RMB800 million (US$103
million). Upon successful completion of the share subscription, Hang Seng will
become the largest shareholder of Yantai City Bank, which serves the rapidly
developing Bohai Economic Rim region.

The share subscription and the terms of the agreement are subject to the
approval of the China Banking Regulatory Commission, other relevant regulatory
authorities and shareholders of Yantai City Bank. Hang Seng will have the right
to nominate Directors and to make recommendations for various senior management
positions, including Vice President and department heads, at Yantai City Bank.

The strategic investment in Yantai City Bank will complement Hang Seng's
existing foothold on the Mainland as the majority of Hang Seng's outlets are
situated in the Pearl River Delta and Yangtze River Delta regions. Following
this latest investment, Hang Seng's total investment on the Mainland will
increase to about RMB7.3 billion, including the capital injected into its wholly
owned subsidiary, Hang Seng Bank (China) Limited, in May last year.

Hong Kong-listed Wing Lung Bank will also take a 4.99 per cent stake in Yantai
City Bank, bringing the total foreign shareholding in the Mainland bank to 24.99
per cent. Under current Mainland regulations, the maximum aggregate shareholding
by all foreign investors in a domestic bank must not exceed 25 per cent.

Today's signing ceremony in Yantai was attended by Mr Zhang Jianting, Mayor of
Yantai, Mr Zhang Guangbo, Vice Mayor of Yantai, Mr Zhuang Yonghui, Chairman of
Yantai City Commercial Bank, Mr Raymond Or, Vice-Chairman and Chief Executive of
Hang Seng Bank and Dr Patrick Wu, Vice-Chairman and Executive Director of Wing
Lung Bank.

Mr Zhuang said: "In light of the accelerating pace of reform and opening up of
China's financial industry, the bringing in of Hang Seng as a strategic investor
will facilitate the sharing of experience, enhance corporate governance and
promote a better business structure. This will help us to achieve international
standards and enhance our market competitiveness."
                                                                            
"Wing Lung Bank's participation as a financial investor will also enhance both
the shareholding structure and development of Yantai City Commercial Bank," he
added.

Mr Or said: "This agreement is another milestone in the rapid expansion of Hang
Seng's business on the Mainland. The Bohai area will join the Pearl River and
Yangtze River Deltas as a key business region for Hang Seng. Alongside our
organic growth, we will actively discuss future business cooperation
opportunities with Yantai City Commercial Bank."

"Our agreement will also benefit the economic development of the Bohai Economic
Rim and facilitate the exchange of banking experience and technical expertise,"
Mr Or added.

Yantai is an international port city in the Bohai Economic Rim region and the
second-largest industrial city in Shandong Province. Yantai has a very sound
economic infrastructure. In 2006, the city's GDP grew by 17 per cent to reach
RMB240.2 billion.

Note to editors

Hang Seng Bank
Founded in 1933, Hang Seng Bank operates around 150 branches and automated
banking centres and 13 Business Banking Centres in Hong Kong. The Bank also
maintains a branch in Shenzhen for foreign currency wholesale business, a branch
in Macau, and representative offices in Xiamen and Taipei.

Established on 28 May 2007, wholly owned subsidiary Hang Seng Bank (China)
Limited operates a mainland China network of 23 outlets in Beijing, Shanghai,
Guangzhou, Dongguan, Shenzhen, Fuzhou, Nanjing, Hangzhou and Ningbo.

With consolidated assets of HK$741.3 billion as at 30 June 2007, Hang Seng Bank
reported a profit attributable to shareholders of HK$8,867 million for the first
six months of 2007 and HK$12.04 billion in 2006. Hang Seng Bank is a principal
member of the HSBC Group, one of the world's largest banking and financial
services organisations. For further information on Hang Seng Bank, please visit
the bank's website at www.hangseng.com.

Yantai City Commercial Bank
Founded in 1997, Yantai City Commercial Bank is the second-largest commercial
city bank in Shandong Province. According to its unaudited financial statements,
the Bank had total assets of RMB26.8 billion as at 31 December 2007. It has 68
outlets and over 1,200 staff. The bank offers various retail banking services
including deposits, consumer loans and debit card services, as well as trade
finance, remittance and other commercial banking services. For further
information, please visit the bank's website at http://www.ytcb.com.

                         




                      This information is provided by RNS
            The company news service from the London Stock Exchange