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Industrial and Commercial Bank of China (Asia) Limited ICBC (Asia) has entered into into a sale and purchase agreement (SPA) with Fortis and Generale Belgian Holding B.V (Fortis) to acquire Fortis Bank Asia HK (FBAHK). Fortis will receive 9% of the enlarged issued share capital of ICBC (Asia) as part of the consideration, and will nominate one person to the ICBC (Asia) board as non-executive director.

FBAHK is a company organised under the laws of Belgium, and has a network of 22 retail branches and 5 dedicated business centers for small to medium sized enterprises . Prior to completion of the SPA, FBAHK will carve out certain of its businesses, including its European and corporate banking usinesses and a property investment subsidiary by selling them to Fortis.

Based on figures in June 2003, total assets of ICBC (Asia) would increase from HK$66 billion to approximately HK$95 billion when the acquisition is completed, and total customer deposits from HK$38 billion to about HK$60 billion. ICBC (Asia) would rank sixth among banks operating in Hong Kong from its previous position of tenth in terms of total assets.

The acquisition price is agreed at an amount equal to 1.05 times the net asset value of FBAHK at the completion date. Based on FBAHKs net asset value as at 30 June 2003, the acquisition price is initially estimated to be HK$2,157 million. The aggregate agreed value of the Consideration Shares is estimated to be HK$612.0 million, and the cash portion of the consideration is estimated to be HK$1,545 million.

Completion shall take place on 30 April 2004, conditional on granting of approval by the Hong Kong Monetary Authority and other regulatory authorities, as well as the fulfilment of certain conditions.

Prior to such merger, FBAHK (to be renamed as Belgian Bank) will operate as a wholly-owned subsidiary of ICBC (Asia). Fortis has undertaken not to be engaged in businesses in Hong Kong that would compete with the businesses to be sold to ICBC (Asia).

ICBC (Asia) is strong in corporate banking, while FBAHK has a respectable retail and commercial banking franchise. The two are complementary in various areas including customer base, network coverage, product portfolio and business profile. The acquisition will result in a better business mix, with an increase in non-interest income ratio and reduction in loan-to-deposit ratio.

Following the acquisition ICBC (Asia) shall be able to benefit from FBAHKs experience and technology in retail and commercial banking. In the longer term, the acquisition will also bring cost synergies. With the new bilateral tax treaty between Hong Kong SAR and Belgium, which was signed on 10 December 2003, FBAHK is expected to to be able to enjoy a more favorable tax environment.


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