HSBC & Bk of Comms Agreement

HSBC Holdings PLC
06 August 2004


                 HSBC SIGNS AGREEMENT TO ACQUIRE 19.9 PER CENT
                       OF BANK OF COMMUNICATIONS LIMITED

The Hongkong and Shanghai Banking Corporation Limited, a wholly-owned subsidiary
of HSBC Holdings plc, has entered into an agreement to acquire a 19.9 per cent
interest in the share capital of Bank of Communications Limited for a cash
consideration of RMB14,461 million (approximately US$1,747 million). This
transaction represents the largest single equity investment in a mainland China
bank by a foreign bank.

Bank of Communications is China's fifth largest bank with total assets of
US$111.9 billion at 31 December 2003. It is one of only 15 commercial banks with
a national banking licence, giving it the ability to operate without
geographical restrictions. Headquartered in Shanghai, the bank has over 2,700
branches and outlets across 137 of the wealthiest cities in mainland China.

The completion of the transaction is subject to various conditions including
obtaining regulatory and other approvals. The consideration will be satisfied
from the HSBC Group's internal resources.

As part of the transaction, HSBC will also enter into separate agreements to
provide technical assistance and services to Bank of Communications as well as
to co-operate strategically with the bank on its credit card business in
mainland China.

Chairman of HSBC Holdings plc, Sir John Bond, said: "This investment represents
a major commitment for both parties: HSBC and Bank of Communications. For HSBC,
this investment provides the Group with a new window for developing our business
in China. In return, we offer Bank of Communications the opportunity to draw on
our international expertise and network. This investment is a vital and
important step in building our business in China."

Jiang Chaoliang, Chairman of Bank of Communications Limited, said: "This
agreement with HSBC represents the largest single equity holding and investment
so far in a Mainland bank by a foreign bank. While Bank of Communications has
obtained its first overseas strategic co-operation partner, HSBC has gained a
stake in China's largest joint stock commercial bank. This transaction offers a
mutually beneficial relationship between two strong banks."

Notes to editors
1. Bank of Communications Limited
Founded in 1908 and headquartered in Shanghai, Bank of Communications Limited
was transformed into the first and largest joint stock commercial bank in China
in 1987. The bank has around 2,700 branches and outlets throughout mainland
China, branches in Hong Kong, New York, Tokyo and Singapore and overseas offices
in London and Frankfurt. It is currently the fifth largest bank in China with
total assets of US$111.9 billion at 31 December 2003.

2. The HSBC Group
The Hongkong and Shanghai Banking Corporation Limited is the founding and a
principal member of the HSBC Group which, with about 10,000 offices in 76
countries and territories and assets of US$1,154 billion at 30 June 2004, is one
of the world's largest banking and financial services organisations.

3. The Hongkong and Shanghai Banking Corporation Limited's financial adviser
The Investment Banking division of The Hongkong and Shanghai Banking Corporation
Limited acted as financial adviser to this transaction for HSBC.

4. Bank of Communications financial adviser
Goldman Sachs (Asia) L.L.C. acted as financial adviser to this transaction for
Bank of Communications Limited.



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