Standard Chartered PLC — M&A Activity 2007

Oct 8, 2007

Standard Chartered

STANDARD CHARTERED PLC

(Registered in England and Wales number 966425)

STOCK CODE: 2888

AGREEMENT TO ACQUIRE AMERICAN EXPRESS 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.

9 October 2007

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CONTENTS

PAGE

LETTER FROM THE BOARD. 1
INTRODUCTION 1
INFORMATION ON AEB 2
DETAILS OF THE ACQUISITION 2
FUNDING 4
INTEGRATION 4
BUSINESS DESCRIPTION 4
CONCLUSION. 4
ADDITIONAL INFORMATION. 5
APPENDIX - GENERAL INFORMATION 6

This circular includes "forward-looking statements". All statements other than statements of historical facts included in this circular, including, without limitation, those regarding Standard Chartered's and AEB's financial position, business strategy, plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Standard Chartered or AEB, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Standard Chartered's or AEB's present and future business strategies and the environments in which Standard Chartered and AEB will operate in the future and such assumptions may or may not prove to be correct. There are a number of factors which could cause actual results, performance of Standard Chartered or AEB, or industry results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results, performance of Standard Chartered or AEB, or industry results to differ materially from those described in the forward-looking statements are Standard Chartered's ability to successfully combine the business of Standard Chartered and AEB and to realise expected synergies from that combination, changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. These forward-looking statements speak only as at the date of this circular. Standard Chartered expressly disclaims any obligation (except as required by the rules of the UK Listing Authority and the London Stock Exchange 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 statement contained herein to reflect any change in Standard Chartered's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

No statement in this circular is intended to be a profit forecast and no statement in this circular should be interpreted to mean that earnings per share of Standard Chartered for the current or future financial years would necessarily match or exceed the historical published earnings per share of Standard Chartered.

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LETTER FROM THE BOARD

Standard Chartered

9 October 2007

Dear Shareholder

AGREEMENT TO ACQUIRE AMERICAN EXPRESS BANK

On 18 September 2007, Standard Chartered PLC ("Standard Chartered" or the "Company") announced that it had on that day entered into an agreement to acquire American Express Bank Ltd. ("AEB") from American Express Company ("AXP") for a total cash consideration equal to the net asset value of AEB at completion plus USD300 million. As at 30 June 2007, this would have amounted to approximately USD860 million (GBP431 million). The acquisition, which is subject to certain conditions, including regulatory consents, is expected to be completed in the first quarter of 2008.

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

Standard Chartered's strategic intent is to be the world's best international bank, leading the way in Asia, Africa and the Middle East. AEB provides Standard Chartered with an opportunity to add capability, scale and momentum in the strategically important Financial Institutions and Private Bank businesses.

AEB is a leading international bank present in 47 countries, dedicated to serving financial institutions and high net worth customers through its global correspondent banking business and its full-service private bank. AEB's global correspondent banking business services approximately 1,700 banks in over 120 countries and its private bank services over 10,000 customers with total assets under management of around USD22.5 billion as at 31 December 2006.

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LETTER FROM THE BOARD

INFORMATION ON AEB

AEB is a wholly-owned subsidiary of AXP. Founded in 1919 and headquartered in New York, AEB has historically served as AXP's platform for its various international lending and commercial payments businesses. Today, AEB has customer relationships in over 120 countries and has an international banking platform dedicated to serving financial institutions and high net worth clients through two main businesses, the Financial Institutions Group and Private Banking. The main businesses included in the acquisition are:

• Financial Institutions Group ("FIG") – a leading global correspondent bank which provides clearing, payments and trade services to banks. FIG has 14 branches and 37 representative offices employing about 700 people. It serves approximately 1,700 banks in 120 countries providing strong and integrated US Dollar, Euro and Yen clearing capabilities.
• Private Banking ("PB") – an established full-service private banking platform which provides advisory services to high net worth individuals covering mutual funds, discretionary asset management, deposits, trust and estate planning, secured lending, FX, and fiduciary services. PB operates across five continents through seven booking centres, 20 marketing offices, and two trust companies. PB employs approximately 400 people of whom approximately 120 are relationship managers, serving more than 10,000 customers. As at 31 December 2006, PB had approximately USD22.5 billion of assets under management.

For the first six months of 2007, AEB, adjusted for excluded assets, generated profit before tax of USD49 million and profit after tax of USD30 million. For the 12 months ended 31 December 2006, AEB, on the same basis, generated profit before tax of USD50 million and profit after tax of USD31 million. For the equivalent period in 2005, AEB generated profit before tax of USD119 million and profit after tax of USD78 million.

As at 30 June 2007, the total assets of AEB, adjusted for excluded assets, were approximately USD15.5 billion and the total risk weighted assets were approximately USD7 billion. AEB employs approximately 2,300 staff with over 85 per cent in Standard Chartered's existing footprint. Based on the unaudited net assets of AEB as at 30 June 2007, the effect of the acquisition will be to increase the net assets of Standard Chartered.

DETAILS OF THE ACQUISITION

On 18 September 2007, Standard Chartered announced that it had entered into an agreement to acquire AEB from AXP for a total cash consideration equal to the net asset value of AEB at completion plus USD300 million. As at 30 June 2007, this would have amounted to approximately USD860 million (GBP431 million). The acquisition, which is subject to certain conditions, including regulatory consents, is expected to be completed in the first quarter of 2008.

As part of the transaction, Standard Chartered and AXP will enter into a put and call option under which AXP can sell and Standard Chartered can buy American Express International Deposit Company ("AEIDC") 18 months after the acquisition of AEB with the consideration payable to AXP being the net asset value of AEIDC at the time of exercise of the option. AEIDC is based in the Cayman Islands and issues short-term, fixed rate certificates of deposit, primarily to AEB customers.

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LETTER FROM THE BOARD

To the best of the knowledge, information and belief of Standard Chartered's Directors (the "Directors"), having made all reasonable enquiry, AXP and its ultimate beneficial owner(s) are third parties, independent of Standard Chartered and connected persons or related parties of Standard Chartered. AXP is a leading card, travel and financial services business founded in 1850.

STRATEGIC RATIONALE

AEB provides Standard Chartered with an opportunity to add capability, scale and momentum in the strategically important Financial Institutions and Private Bank businesses. In particular, the acquisition will:

• Significantly enhance Standard Chartered's Financial Institutions transaction banking business by bringing both new client relationships and new capabilities to this key customer segment. This acquisition will double Standard Chartered's US Dollar clearing business, reinforcing its position among the leading US Dollar clearers and ranking the Group sixth globally. In addition, AEB will provide Standard Chartered with a direct Euro and Yen clearing capability. The introduction of new client relationships will also provide excellent opportunities to cross-sell Standard Chartered's broad product range.
• Fast-track the development of Standard Chartered's Private Bank. The acquisition will provide a step change to Standard Chartered's recently launched Private Bank, adding approximately USD22.5 billion of assets under management and approximately 120 relationship managers, principally located in Standard Chartered's existing footprint.
• Further deepen Standard Chartered's existing network and will provide access to a select number of new growth markets. Additionally, the acquisition will include valuable branch licences in India and Taiwan subject to regulatory approvals.
• Create significant synergy potential across business lines with pre-tax cost savings expected to total well in excess of USD100 million per annum from 2009 onwards. The business case for the acquisition is conservative and compelling even before anticipated income synergies.

FINANCIAL RATIONALE

• The total cash consideration of approximately USD860 million (GBP431 million) represents 14.3 times AEB's annualised 2007 first half profit after tax and 1.5 times its net asset value as at 30 June 2007.

• It is expected that the acquisition will be accretive to Standard Chartered's Earnings Per Share in 2009, the first full year of ownership. It is also expected to generate a double digit Return on Investment in 2009 before the allocation of integration expenses. Assuming the acquisition had completed on 30 June 2007, Standard Chartered's capital ratios after the transaction would have remained above the target ranges for both Tier 1 and total capital.

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LETTER FROM THE BOARD

FUNDING

Standard Chartered intends to finance the acquisition from internal cash resources and its ongoing debt funding programme.

INTEGRATION

The integration is expected to take approximately 24 months to complete. The majority of planned integration costs will be borne in the first 12 months following completion of the transaction. The benefits of combining the two businesses are expected to flow through rapidly, and will significantly enhance the earnings capacity of the acquired business.

Cost savings will principally be derived from combining IT systems and back-office operations and support function efficiencies.

In order for Standard Chartered to effect a smooth integration of AEB, it has been agreed that AXP will continue to provide certain key transitional services to AEB for a period after completion.

BUSINESS DESCRIPTION

Standard Chartered PLC is listed on both the London Stock Exchange and the Hong Kong Stock Exchange and is consistently ranked among the top 25 companies in the FTSE-100 by market capitalisation. The London-headquartered group has operated for over 150 years in some of the world's most dynamic markets, leading the way in Asia, Africa and the Middle East. Its income and the number of employees have more than doubled over the last five years primarily as a result of organic growth and supplemented by acquisitions.

Standard Chartered aspires to be the best international bank in its markets by being the right partner for its stakeholders and leading by example. The group now employs over 60,000 people, representing some 100 nationalities, in more than 1,400 branches located in over 50 countries. The bank generates more than 90 per cent of its profits from Asia, Africa and the Middle East, with balanced income derived from both Wholesale and Consumer Banking.

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.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

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

Yours sincerely

E. Mervyn Davies

On behalf of the Board
E Mervyn Davies CBE
Chairman

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

Chairman: Evan Mervyn Davies CBE

Executive Directors: Peter Alexander Sands; Gareth Richard Bullock; Michael Bernard DeNoma; Richard Henry Meddings; and

Independent Non-Executive Directors: John Wilfred Peace; Sir CK Chow; James Frederick Trevor Dundas; Valerie Frances Gooding, CBE; Rudolph Harold Peter Markham; Ruth Markland; Sunil Bharti Mittal; Paul David Skinner; Oliver Henry James Stocken; and Lord Adair Turner.

Standard Chartered PLC
1 Aldermanbury Square
London EC2V 7SB

Registered Office as above
Registered in England and Wales 966425

The following exchange ratio has been used in this circular:
USD1.9955: GBP1

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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 5 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 Securities and Futures Ordinance (Cap.571 of the Laws of Hong Kong) ("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. In addition, the Company has adopted a code of conduct regarding securities transactions by Directors in accordance with the UK and Hong Kong Listing Rules. As at 4 October 2007, which was the latest practicable date before publication of this circular (the "Latest Practicable Date"), 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
E M Davies	110,000	796,430	Nil - 971p	2007 - 2017
J W Peace	5,000	-	n/a	n/a
P A Sands	47,713	1,110,159	Nil - 1243p	2007 - 2018
G R Bullock	88,161	338,429	Nil - 971p	2007 - 2017
Sir C K Chow	15,664	-	n/a	n/a
M B DeNoma	139,715	323,092	Nil - 971p	2008 - 2017
J F T Dundas	2,100	-	n/a	n/a
V F Gooding	2,045	-	n/a	n/a
R H P Markham	2,407	-	n/a	n/a
R Markland	2,178	-	n/a	n/a
R H Meddings	151,154	404,521	Nil - 1064p	2007 - 2017
S B Mittal	2,000	-	n/a	n/a
P D Skinner	3,264	-	n/a	n/a
O H J Stocken	10,000	-	n/a	n/a
Lord Turner	5,053	-	n/a	n/a

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APPENDIX

GENERAL INFORMATION

(ii) Substantial Shareholders’ Interests in Shares

As far as the Directors are aware, Temasek Holdings (Private) Limited is the only shareholder as at the Latest Practicable Date with an interest of more than 10 per cent in the Company’s issued ordinary share capital carrying a right to vote at any general meeting of the Company.

As at the Latest Practicable Date, the Company had been notified by the following companies of their interests in the total voting rights of the Company:

Shareholder	Number of ordinary shares	Percentage of voting rights Direct	Percentage of voting rights Indirect
Temasek Holdings (Private) Limited	241,647,053	–	17.22
Legal & General Group PLC	47,526,644	3.43	–

C. SERVICE CONTRACTS

All of the Executive Directors, 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 the Group’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.

The Company’s Chairman, Mr Evan Mervyn Davies, has a contract subject to 12 months’ rolling notice, albeit that the contract automatically expires on 31 December 2011. The terms of his contract governing PILON provisions and payments on termination are similar to those outlined above in relation to the Executive Directors.

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

D. DIRECTORS’ COMPETING INTERESTS

None of the Directors or their respective associates had, as at the Latest Practicable Date, 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 the Latest Practicable Date, neither the Company nor any of its subsidiaries are aware of any litigation, arbitration or claim, current, pending or threatened, that they are engaged in and that may have a material effect on the financial position or profitability of the Company and its subsidiaries.

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APPENDIX

GENERAL INFORMATION

F. GENERAL

(i) The secretary of the Company is Annemarie Verna Florence Durbin, a barrister and solicitor of the High Court of New Zealand as well as a solicitor of the Supreme Court of England and Wales.

(ii) The qualified accountant of the Company for the purpose of Rule 3.24 of the Hong Kong Listing Rules is Simon Jeremy Glass, 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 Rooms 1806 - 1807, 18th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

(iv) Chinese Translation

If you would like a Chinese version of this circular please contact: Computershare Hong Kong Investor Services Limited at Rooms 1806 - 1807, 18th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong.

通函之中文譯本可向香港中央證券登記有限公司索取，地址為香港皇后大道東183號合和中心18樓1806-1807室。

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

© Standard Chartered PLC

October 2007

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