Standard Chartered PLC — M&A Activity 2005

Feb 1, 2005

Standard Chartered

STANDARD CHARTERED PLC

(Registered in England and Wales number 966425)

STOCK CODE: 2888

ACQUISITION OF KOREA FIRST BANK

DISCLOSEABLE TRANSACTION

THIS CIRCULAR IS FOR YOUR INFORMATION AND, OTHER THAN AS DESCRIBED IN THE FIRST PARAGRAPH BELOW, REQUIRES NO ACTION ON YOUR PART.

If you have sold or transferred all your shares in Standard Chartered PLC, you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

The Placing Shares (as defined on page 6 of this circular) have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and they may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

1 February 2005

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CONTENTS	PAGE
Letter from the Board	1
Introduction	1
Description of Korea First Bank	2
Description of Standard Chartered	3
Acquisition	3
Conclusion	6
Additional Information	6
Appendix – General Information	7

This circular includes “forward-looking statements”. All statements other than statements of historical facts included in this circular, including, without limitation, those regarding the Company’s financial position, business strategy, markets, plans and objectives of management for future operations (including plans for the integration and development of Korea First Bank and other development plans and objectives relating to the Company’s products and services), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of the Company or those markets and economies to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment (including, in respect of Korea First Bank, economic and market conditions in Korea) in which the Company will operate in the future and such assumptions may or may not prove to be correct. These forward-looking statements speak only as at the date of this circular. The Company expressly disclaims any obligation (other than pursuant to the Listing Rules of the UK Listing Authority (being the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000) or the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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LETTER FROM THE BOARD

Standard Chartered

1 February 2005

Dear Shareholder

ACQUISITION OF KOREA FIRST BANK

On 10 January 2005, Standard Chartered PLC ("Standard Chartered" or the "Company") announced that Standard Chartered Bank had entered into an agreement on that day to acquire the entire share capital of Korea First Bank for approximately KRW3.4 trillion (US$3.3 billion) in cash. The acquisition, which is subject to certain conditions including regulatory consents, is expected to be completed by the end of April 2005.

The acquisition constitutes a discloseable transaction of the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Hong Kong Listing Rules").

The purpose of this circular is to give you further information regarding the acquisition and other information required by the Hong Kong Listing Rules for a discloseable transaction. This circular also complies with the Listing Rules of the UK Listing Authority (being the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000) (the "UK Listing Rules").

INTRODUCTION

A stated strategic objective for Standard Chartered is to build a bigger presence in the Republic of Korea (South Korea, hereafter referred to as "Korea") which is the world's 10th largest economy, Asia's third largest and is expected to grow by 4.3% in 2005. Korea's banking sector generates a revenue pool estimated to be worth approximately US$44 billion, over three times the size of Hong Kong, according to Standard Chartered estimates.

The acquisition of Korea First Bank will significantly increase Standard Chartered's presence in Korea, increasing the revenue contribution to 16% of Standard Chartered's total revenue, based on figures for the first half of 2004.

The acquisition will also result in an increase in Standard Chartered's assets in Korea, making Korea Standard Chartered's second largest market, by assets, after Hong Kong.

Korea First Bank is the seventh largest banking group in Korea by assets, with a market share of approximately 6% and over three million retail customers. Korea First Bank has one of the lowest ratios of non-performing loans in Korea (1.4%: September 2004).

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LETTER FROM THE BOARD

The purchase price represents approximately 1.87 times the net asset value of Korea First Bank as at 30 September 2004.

Based on Standard Chartered's forecasts for business growth and transaction benefits, the acquisition of Korea First Bank is expected to be earnings per share accretive in 2006.

Standard Chartered will finance the acquisition using the proceeds of an institutional placing of new Standard Chartered ordinary shares, which was completed on 14 January 2005 and raised net proceeds of approximately GBP1,071 million, together with other funding resources.

DESCRIPTION OF KOREA FIRST BANK

Korea First Bank is a Korean retail and wholesale bank with a national network of branches. It is the seventh largest nationwide commercial bank in Korea, as measured by assets, and the fifth largest as measured by branches.

Historically Korea First Bank was a wholesale-based bank but, following a change of control in December 1999, the bank was substantially restructured and refocused as a mortgage-led consumer business. Based on unaudited data as at 30 September 2004, mortgages made up 45% of total loans. The bank has been restructured through a number of initiatives including implementing a new operating platform, setting up shared service centres, centralising risk management and creating a focus on profitability rather than volume.

Korea First Bank is a nationally networked bank with:

• a Korean banking market share of around 6%
• approximately 400 branches
• approximately 2,100 ATMs and cash deposit machines
• 68,000 corporate and public customers
• 3.3 million retail customers
• over 1.1 million credit cards in circulation
• 2.6 million e-banking clients
• over 5,000 employees

As at 30 September 2004, using unaudited data, Korea First Bank had:

• total assets of KRW44.1 trillion (US$41.9 billion)

• total loans of KRW31.5 trillion (US$30.0 billion)

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LETTER FROM THE BOARD

• net assets of KRW1.8 trillion (US$1.7 billion)
• a total capital adequacy ratio of 12.1% and a tier 1 ratio of 7.0%

For the nine months ended 30 September 2004, unaudited revenues were KRW785 billion (US$747 million) and unaudited profits before tax were KRW134 billion (US$127 million). Audited profits before tax were KRW95 billion (US$90 million) in 2002 and KRW93 billion (US$88 million) in 2003. Korea First Bank recorded audited profits after tax and extraordinary items of KRW102 billion (US$97 million) in 2002 and an audited loss after tax and extraordinary items of KRW13 billion (US$12 million) in 2003. Unaudited net assets of Korea First Bank were KRW1,733 billion (US$1,649 million) at 30 June 2004 and KRW1,803 billion (US$1,716 million) at 30 September 2004.

DESCRIPTION OF STANDARD CHARTERED

Standard Chartered employs over 30,000 people in over 500 locations in more than 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas. It is one of the world's most international banks, with a management team comprising some 70 nationalities.

Standard Chartered is listed on both the London Stock Exchange and The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") and is in the top 25 FTSE-100 companies, by market capitalisation.

It serves both consumer and wholesale banking customers. Consumer Banking provides credit cards, personal loans, mortgages, deposit taking and wealth management services to individuals and small to medium sized enterprises. Wholesale Banking provides corporate and institutional clients with services in trade finance, cash management, lending, custody, foreign exchange, debt capital markets and corporate finance.

Standard Chartered in Korea

Standard Chartered first opened in Korea in the late 19th century and was the first European bank to be invited back into the country in 1968. It operates today through a branch in Seoul, with total assets of approximately US$3.3 billion supported by 170 employees and about 300 direct sales agents. Standard Chartered's business has historically focused on commercial banking, treasury and debt capital markets. In September 2003, Standard Chartered opened a consumer banking business, which it has grown organically.

ACQUISITION

Details of the Acquisition

Under the terms of the share purchase agreement dated 10 January 2005 between Standard Chartered Bank and KFB Newbridge Holdings (Private) Limited ("KFB Newbridge"), KFB Newbridge will exercise its rights to require the other shareholders of Korea First Bank (being the Ministry of Finance and Economy of the Republic of

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LETTER FROM THE BOARD

Korea and the Korea Deposit Insurance Corporation (the "Government Shareholders") to accede to the share purchase agreement and sell to Standard Chartered Bank 100% of the shares in Korea First Bank. KFB Newbridge is a company established to hold the investment of private equity investors in Korea First Bank.

The total consideration payable in cash to the shareholders of Korea First Bank is approximately KRW3.4 trillion (approximately US$3.3 billion). The transaction, which is subject to certain conditions including regulatory consents, is expected to be completed by the end of April 2005. Unless otherwise approved by the parties, such approval not to be unreasonably withheld or delayed, completion must take place within 150 days after 10 January 2005, failing which the agreement will terminate.

In addition to the share purchase agreement, Standard Chartered Bank has entered into a transition agreement with Korea First Bank dated 10 January 2005 in relation to, among other things, the carrying on of business by Korea First Bank prior to completion of the transaction.

To the best of the knowledge, information and belief of Standard Chartered's directors (the "Directors") having made all reasonable enquiry, KFB Newbridge, the Government Shareholders and Korea First Bank are third parties independent of Standard Chartered and connected persons (as defined in the Hong Kong Listing Rules) of Standard Chartered.

Acquisition Rationale and Benefits

Korea's banking sector has a revenue pool of approximately US$44 billion, according to Standard Chartered estimates. Korea First Bank represents a robust platform for growth in both wholesale and consumer banking.

Standard Chartered expects to leverage Korea First Bank's nationwide platform to capture new product and customer segments and increase earnings. Korea First Bank has been restructured by its current management team and would now benefit from the product and management breadth brought by an international partner which is expected to facilitate significant growth. This acquisition will provide additional diversification of Standard Chartered's earnings base.

Korea is one of the largest consumer and wholesale banking markets in the world and there is opportunity to create value by the introduction of more sophisticated banking products.

The acquisition presents an opportunity to acquire a well-managed bank with a sizeable national distribution network that would serve as a strong platform for growth. Based on Standard Chartered's forecasts for business growth and transaction benefits, the acquisition is expected to be earnings per share accretive in 2006.

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LETTER FROM THE BOARD

Standard Chartered will look to grow Korea First Bank in ways that will include:

In Consumer Banking
- building relationships focused on market segments e.g. for small and medium-sized enterprises ("SMEs") and wealth management products;
- cross-selling to mortgage and personal loan customers;
- product development and innovation in trade and cash management for SMEs, mortgages, deposit and investment products;
- sharing best practice techniques in customer segmentation, credit scoring and risk management.

In Wholesale Banking
- leveraging Standard Chartered's international network to realise opportunities in trade finance, global markets, and regional cash management;
- expanding the client base in multinational corporations, financial institutions and middle market companies;
- broadening the range of fee-based products across global market and commercial banking products;
- restructuring funding utilising Standard Chartered's offshore funding capability.

Financial Impact of the Acquisition on Standard Chartered

Standard Chartered has agreed, after arm's length negotiations with KFB Newbridge, to pay approximately KRW3.4 trillion (approximately US$3.3 billion) for a 100% interest in Korea First Bank. The agreed purchase price represents approximately 1.87 times the net asset value of Korea First Bank as at 30 September 2004.

Assuming the acquisition and the placing referred to in the subsection headed "Funding" below had completed as at 30 June 2004, Standard Chartered's tier 1 ratio would have been in the range of 7.4% to 7.7% and its core equity ratio would have been in the range of 5.7% to 6.0%.

Based on Standard Chartered's forecasts for business growth and transaction benefits, the acquisition is expected to be earnings per share accretive in 2006. The acquisition will result in an increase of Standard Chartered's assets in Korea, making Korea Standard Chartered's second largest business, by assets, after Hong Kong. The effect on net assets of Standard Chartered will also be positive based on the unaudited net assets of Korea First Bank as at 30 September 2004.

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LETTER FROM THE BOARD

Funding

The consideration for the acquisition will be partly met out of the proceeds of an institutional placing of new Standard Chartered ordinary shares representing approximately 9.99% of Standard Chartered's existing ordinary shares, and partly with other funding resources. The placing of 117,902,943 new Standard Chartered ordinary shares ("Placing Shares") at a price of 920 pence (approximately HK$134.49) per Placing Share was completed and the Placing Shares issued on 14 January 2005. The placing raised net proceeds of approximately GBP1,071 million (approximately HK$15.66 billion). Pursuant to applications made by Standard Chartered, the Placing Shares were admitted by the UK Listing Authority to its Official List and by the London Stock Exchange to trading on the London Stock Exchange's market for listed securities and the Hong Kong Stock Exchange approved the listing of and granted permission to deal in the Placing Shares on the Hong Kong Stock Exchange on 14 January 2005. Dealings in the Placing Shares commenced in London on 14 January 2005 and in Hong Kong on 17 January 2005. The Placing Shares rank pari passu in all respects with the other issued ordinary shares of Standard Chartered, including the right to receive all dividends and other distributions declared, made or paid after 14 January 2005. All the Placing Shares were issued in uncertificated form.

CONCLUSION

The Directors consider the terms of the acquisition to be fair and reasonable and in the interests of the Company and its shareholders as a whole.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular.

Yours sincerely

On behalf of the Board
Bryan K Sanderson CBE
Chairman

As at the date of this circular, the Board of Directors of the Company comprises:

Executive Directors:
Bryan Kaye Sanderson CBE, Evan Mervyn Davies CBE, Michael Bernard DeNoma, Christopher Avedis Keljik, Richard Henry Meddings, Kaikhushru Shiavax Nargolwala, Peter Alexander Sands; and

Independent Non-Executive Directors:
Sir C K Chow, James Frederick Trevor Dundas, Valerie Frances Gooding, Ho KwonPing, Rudolph Harold Peter Markham, Ruth Markland, Hugh Edward Norton, Paul David Skinner and Oliver Henry James Stocken.

Standard Chartered PLC
1 Aldermanbury Square
London EC2V 7SB

Registered Office as above
Registered in England 966425

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APPENDIX

GENERAL INFORMATION

A. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Hong Kong Listing Rules and the UK Listing Rules for the purpose of giving information with regard to the Company and the acquisition disclosed above. The Directors, whose names appear on page 6 of this circular, collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

B. DISCLOSURE OF INTERESTS

The Company and its Directors, chief executives and shareholders have been granted a partial exemption from the disclosure requirements under Part XV of the SFO. As a result of this exemption, Directors, chief executives and shareholders no longer have an obligation under the SFO to notify the Company of shareholding interests, and the Company is no longer required to maintain a register of Directors' and chief executives' interests under section 352 of the SFO nor a register of interests of substantial shareholders under section 336 of the SFO. The Company is, however, required to file with the Hong Kong Stock Exchange any disclosure of interests made in the UK. As at 25 January 2005, the Directors, chief executives and substantial shareholders of the Company held the following interests based on the disclosure of interests made in the UK:

(i) Directors' Interests in Shares and Options

	Total interest in ordinary shares	Total interest in ordinary shares under option	Range of option exercise prices	Range of option exercise periods
B K Sanderson	101,617	216,999	Nil – 935.5p	2005 – 2015
E M Davies	124,538	1,611,022	Nil – 935.5p	2005 – 2015
Sir C K Chow	15,664	–	n/a	n/a
M B DeNoma	53,172	845,455	Nil – 935.5p	2005 – 2015
J F T Dundas	2,100	–	n/a	n/a
V F Gooding	–	–	n/a	n/a
Ho Kwon Ping	2,375	–	n/a	n/a
C A Keljik	164,177	835,059	Nil – 935.5p	2005 – 2015
R H P Markham	2,232	–	n/a	n/a
R Markland	2,019	–	n/a	n/a
R H Meddings	17,947	434,491	Nil – 935.5p	2005 – 2015
K S Nargolwala	116,917	905,453	Nil – 935.5p	2005 – 2015
H E Norton	4,000	–	n/a	n/a
P A Sands	24,238	757,885	Nil – 935.5p	2005 – 2015
P D Skinner	3,029	–	n/a	n/a
O H J Stocken	5,000	–	n/a	n/a

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APPENDIX

GENERAL INFORMATION

(ii) Substantial Shareholders’ Interests in Shares

As far as the Directors are aware, there were no shareholders as at 25 January 2005 with an interest of more than 10% in the Company’s issued ordinary share capital.

As at 25 January 2005, the Company had recorded in its register of interests the following interests of 3% or more in its issued ordinary share capital:

Shareholder	Number of ordinary shares	Percentage of issued ordinary share capital
Fidelity Investments	70,900,914	5.47
The estate of Tan Sri Khoo Teck Puat	61,663,304	4.75
Goodwood Park Hotel Limited*	64,180,842	4.95
Glen Holdings (Private) Limited*	60,762,549	4.68
The Capital Group Companies Inc	55,370,193	4.27
Legal and General Investment Management Limited	39,250,232	3.03

• Glen Holdings (Private) Limited is 100% owned by Goodwood Park Hotel Limited, therefore the notifiable interest shown for Goodwood Park Hotel Limited includes the number of shares shown for Glen Holdings (Private) Limited.

C. SERVICE CONTRACTS

All of the Group Executive Directors, excluding Mr B K Sanderson, are entitled to receive and required to give, 12 months’ notice. Each contract is subject to 12 months’ rolling notice but, in any event, terminates automatically at the first annual general meeting following the executive director’s 60th birthday. The contracts contain payment in lieu of notice (PILON) provisions which can be exercised at Standard Chartered Bank’s discretion. The PILON would comprise an amount equal to 12 months’ base salary, pension contributions/entitlement and certain benefits and allowances (such as life assurance and car allowance). The amount of any bonus payable as part of the PILON is determined taking into consideration individual and Group performance. Any payment under the PILON would be paid in quarterly instalments and be subject to mitigation.

Mr B K Sanderson has a 12 month rolling contract which in any event expires on 14 October 2008. His contract contains clauses specifying payments in the event of early termination by Standard Chartered Bank. In such circumstances the contract provides for payment that would take account of his base salary and certain allowances but exclude non-cash benefits and performance related bonus for the relevant period of notice.

The Independent Non-executive Directors do not have service contracts.

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APPENDIX

GENERAL INFORMATION

D. DIRECTORS' COMPETING INTERESTS

None of the Directors or their respective associates had, as at 25 January 2005, any interest in a business which competes, or is likely to compete, either directly or indirectly, with the business of the Company and its subsidiaries as required to be disclosed pursuant to the Hong Kong Listing Rules.

E. LITIGATION

As at 25 January 2005, neither the Company nor any of its subsidiaries was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

F. GENERAL

(i) The secretary of the Company is David John Brimacombe, a solicitor of the Supreme Court of England and Wales.

(ii) The qualified accountant of the Company is Averina Anita Snow, an Associate of the Institute of Chartered Accountants in England and Wales.

(iii) The branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

(iv) In the event of any inconsistency between the English text and the Chinese text of this circular, the English version shall prevail.

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© Standard Chartered PLC

February 2005

Registered Office:
1 Aldermanbury Square
London EC2V 7SB
Telephone: 020 7280 7500
www.standardchartered.com

Principal Place of Business
in Hong Kong:
32nd Floor, 4-4A Des Voeux Road,
Central, Hong Kong

Registered in England
Number: 966425