News Release

HSBC Signs Memorandum of Understanding with Certain Partners of Arthur Andersen LLPS U.S. Private Client Service Practice

28 June 2002

Working with HSBCs Group Private Banking business, HSBC USA Inc has entered into a memorandum of understanding with certain partners of Arthur Andersen LLPs (AA LLP) U.S. Private Client Service Practice for such partners to join a new HSBC Private Client Services Group in the U.S. serving the wealth and tax advisory needs of high net worth individuals.

It has also entered into a memorandum of understanding with AA LLP relating to the release of such partners and providing for the acquisition of certain assets for a total consideration of approximately US$15 million. The proposed transaction is subject to the completion of definitive legal documentation and certain other conditions.

The professionals from AA LLPs U.S. Private Client Services Practice who will be joining HSBC are recognized experts in the wealth and tax advisory field. The new business will be a strategic and core initiative for HSBCs private banking businesses both within HSBC USA Inc and across the Group.

Under the terms of the proposed transaction, a new company, Wealth and Tax Advisory Services, Inc., will be formed which will be a wholly-owned subsidiary of HSBC USA Inc. It will employ approximately 25 former partners and principals of AA LLP and 180 other former AA LLP personnel. The firm will operate from the following locations: New York City; Los Angeles, Orange County, and San Francisco, California; Boston, Massachusetts; Vienna, Virginia; West Palm Beach, Florida; and Charlotte, North Carolina.

Youssef A Nasr, President and CEO of HSBC USA Inc commented, "Establishing this business within HSBC USA Inc will allow us to provide added-value advisory services to our private banking clients and will help the continued expansion of our top-tier private banking operations, especially within the U.S.

"It has long been HSBCs stated strategy to develop our wealth management and private banking business to better serve our clients. This high value-added, fee-generating business fits exactly within that strategy, widening the scope of services that we provide to our current and future clients."

Clive Bannister, Group General Manager and CEO of Group Private Banking, welcomed the transaction as further evidence of the HSBC Groups commitment to private banking, to North America, and to the provision of sophisticated advice to high net worth individuals and their families. In order to serve clients better, Group Private Banking has developed a number of global practices which offer a comprehensive range of specialized products and services to high net worth individuals. The new business will be part of this global effort.

Mark Vorsatz, CEO Designate of Wealth and Tax Advisory Services, Inc. added, "We are looking forward to joining the HSBC Group. This strategic partnership will allow us to provide enhanced services to both existing and new clients and better fulfill their wealth management needs."