Major Shareholder:

• Bank of China ¡V 75.0%

The Group is a leading commercial banking group in Hong Kong. Through 343 branches, 434 ATMs and other delivery channels in Hong Kong, the Group offer a comprehensive range of financial products and services to retail and cooperate customers. BOCHK, the principal operating subsidiary, is one of the three bank note issuing banks in Hong Kong. In addition, the Group has 14 branches in Mainland China to meet the cross-border banking needs of the Hong Kong and Mainland China customers.

The Group is the second largest commercial banking group in Hong Kong in terms of assets and customer deposit. At December 31, 2001, the Group is one of the two largest tenders in Hong Kong. For the year ended December 31, 2001. The operating profits before provisions and profit attributable to shareholders were HK$13,162 million and HK$2,768 million respectively. At December 31, 2001, the Group had total assets of HK$766,140 million and shareholders'funds of HK$52,170 million.

The Group has three principal lines of business:

Retailing banking. The Group is a leader in the retail banking sector in Hong Kong. At December 31, 2001, the Group was the third largest home mortgage lender with a 16% market share in terms of outstanding loans and one of the largest credit card issuers in Hong Kong.

Corporate banking. The Group is a leader in the corporate banking sector in Hong Kong. At December 31, 2001, the Group was one of the two largest corporate lenders in Hong Kong, with a 15.6% market share in terms of outstanding loans.

Treasury. The Group is one of the leading participants in the inter-bank money market in Hong Kong. The Group is also provide traditional treasury services to retail customers, including foreign exchange and bullion trading, and were voted by Global Finance magazine as one of the best foreign exchange banks in 2001.

The Directors believe that the Group has the following competitive advantages:

• the "Bank of China" brand, one of the most well-recognized branches in Hong Kong;
• a leading presence in the financial services market in Hong Kong;
• an extensive distribution network for banking products and services in Hong Kong;
• integrated financial services offering and substantial cross selling opportunities; and
• a competitive advantage in Mainland China related banking businesses.

• if the Group is unable to control and reduce the level of classified loans in the loan portfolio, the financial condition and results of operations will be diversely affected.
• A continuing slowdown in loan growth would result in decreased revenues and income and adversely affect the financial condition and results of operations.
• Any significant declines in the value o the collateral securing the loans may adversely affect the financial condition and results of operations
• The highly competitive nature of the banking industry in Hong Kong could adversely affect the profitability.
• The Group will be controlled by BOC, whose interest may not always coincide with the interests of the other shareholders.

The objective is to maximize shareholder value. To achieve this objective, the Group plan to leverage the strengths and capitalize on the opportunities arising from the restructuring and Merger. Specifically, the Group intends to strengthen the position as one of the leading commercial banking groups in Hong Kong.

The Group plan to expand the business with the existing customers and increase the revenues by broadening the range of the products and services and increasing the cross-selling efforts, with a view towards satisfying the increasingly complex and specific needs of the customers.

The market for consumer lending credit cards and personal financial services is not as well developed in Hong Kong as in other developed markets. The group believe that this market has significant growth potential in light of the high savings rates and the high per capita income in Hong Kong. The Group intends to capitalize on the opportunities in the personal financial services market as well as focus on cash management, treasury and other high return product segments in Hong Kong.

The Group intends to improve the product and services distribution capability of the branch network by tailoring the products and services offered by a particular branch to the specific needs of the local market. The Group seeks to optimize the services scope and coverage of the branch network by enhancing the customer expertise of each particular branch through additional training and the use of technology.

The Selling Shareholder will receive all of the net proceeds of the Global Offering which (after deducting the commissions and the estimated expenses payable by the Selling Shareholder in connection with the Global Offering and without tacking into account the Retial discount, assuming the Over-allotment Option is not exercised and assuming an offer Price of HK$9.50 per Offer Share, being the maximum offer Price) are estimated to be approximately HK$20,764 million (or approximately HK$23,918 million if the Over-allotment Option s exercised in full). The Group will not receive any of the proceeds of the Global Offering.