Stanchart to acquire American Express Bank

Standard Chartered PLC (Standard Chartered or the Group) announces that it has entered into an agreement today 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 (GBP 431 million).

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. The acquisition, which is subject to certain conditions, including regulatory consents, is expected to be completed in the first quarter of 2008.

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 (GBP 431 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.

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.

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.

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.

The acquisition is a discloseable transaction of Standard Chartered under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and a circular containing further details of the acquisition will be sent to Standard Chartered shareholders as soon as practicable in compliance with such rules.

To the best of the knowledge, information and belief of Standard Chartered's 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.

The Directors of Standard Chartered consider the terms of the acquisition to be fair and reasonable and that the transaction is in the interests of Standard Chartered PLC and its shareholders as a whole.

Peter Sands, Group Chief Executive of Standard Chartered, said: "We are delighted to welcome the employees and customers of American Express Bank into Standard Chartered. The acquisition will add capability and scale to two of the Group's strategically important businesses. AEB's balance sheet is highly liquid and its income is predominantly fee-based. This is a transaction which has compelling strategic and financial logic and is management accretive."

W. Richard Holmes, Chairman and Chief Executive Officer, American Express Bank Ltd., said: "This transaction represents an exciting development for the customers and employees of American Express Bank. Becoming part of a major global financial institution whose primary focus is on international banking will afford attractive expanded opportunities for our business."

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