The acquisition will increase HSBC's island-wide branch network from eight to 47, giving it a presence in all the major cities in Asia's fourth biggest banking market.

The Taiwan Government's Central Deposit Insurance Corporation (CDIC) took control of The Chinese Bank in January 2007.

According to HSBC:

"As at 30 September 2007, gross assets were NT$100.16 billion (approximately US$3,097 million). The agreement relating to this acquisition will result in HSBC assuming The Chinese Bank's assets, liabilities and operations with a payment by the CDIC to deliver an agreed net asset position."

"In addition, HSBC will provide certain additional capital to ensure that its enlarged operations maintain appropriate financial ratios. The amount of such additional capital will be determined by reference to the balance sheet as at completion. Based on information currently available, it is estimated that this will be between the Taiwanese dollar equivalent of US$300 million to US$400 million."

The Chinese Bank has 36 branches and over one million customers throughout Taiwan, and provides a full range of services to retail customers as well as small-to-medium size enterprises and large corporates.

Vincent Cheng, HSBC Chairman, announced that:

"Taiwan is a key component of HSBC's Greater China positioning. Over 750,000 Taiwanese companies currently operate in China and there was US$7.6 billion of foreign direct investment from Taiwan in 2006, up over 180 per cent year-on-year. Together with our market leading franchise in Hong Kong and position as the largest foreign bank in China, HSBC is strongly positioned to benefit from the growing level of trade and investment in Greater China and across the region."

The transaction is subject to the necessary regulatory approvals being obtained.