(Sept. 28, 2001, Taipei) Bank SinoPac, National Securities, and SinoPac Securities today announced that their boards have approved the founding of SinoPac Holdings, which marks the first successful consolidation case between banking and securities sectors in Taiwan. The new SinoPac Holdings will command a capital value of NT$ 35.3 billion, 59.93% of which is possessed by Bank SinoPac shareholders, 38.68% by National Securities Corporation, and 1.39% by SinoPac Securities (non Bank SinoPac) shareholders. Mr. Richard M. Hong, Chairman/CEO of National Securities & Finance Group, will be appointed to Chairman of SinoPac Holdings and Mr. Paul C. Lo, Chairman of Bank SinoPac, was appointed CEO of the company. The new company will leverage from strengths of its mother companies and create a “1+1>2” synergy.

The merger of banks and securities will be an important step when the Financial Holding Company Law becomes effective this November, said Richard M. Hong. “We have decided to partner with Bank SinoPac because of its outstanding performance and renowned reputation in the local and international banking community. We also share common vision and strategies. SinoPac Holdings, targeting Taiwan, Hong Kong ,U.S.A., and Mainland China as the major markets, aims to be one of the best financial holding companies in the Pacific Rim,” continued Mr. Hong.

Richard M. Hong and Paul C. Lo both agree that scale and professionalism will be the core competitive strength for future financial holding companies. The partnership between National Securities and Bank SinoPac is only a start-up for further expansion. SinoPac Holdings will continue to seek new partners and pursue a role as one of the leading financial holding groups in Taiwan.

The combination of Bank SinoPac and National Securities will be a mutually complimentary move, resulting in an immediate increase of retail sites to 88 and client base to 1.1 million, of which 540,000 are frequent users, said Paul C. Lo. The consolidation is expected to generate a financial heavyweight with more than NT$ 4.2 billion in earning synergy through cross-selling of products from both sides, according to the estimation of one renowned consulting company.

The new SinoPac Holdings will take up 5% of the local securities brokerage market share, ranking as the third largest securities company. The e-brokerage business will total 16% of market share, making it the largest provider in Taiwan. Furthermore, Bank SinoPac's leading account aggregation service MMA will double its customer base from the current 100,000 to 200,000 within one year. At the same time, significant synergetic value on the services of deposit/lending, credit card, corporate banking, asset management, securities brokerage and treasury operation will be produced through cross-selling products from both sides.

The combination of Bank SinoPac, National Securities and SinoPac Securities (80.56% shares held by Bank SinoPac) marks the first move in the consolidation plan and creates a base for further expansion. SinoPac Securities will merger with National Securities in its net worth. The current 19.44% SinoPac Securities (non Bank SinoPac) shares will be converted to 1.39% SinoPac Holdings shares, in line with the Financial Holding Company Law. The second stage of the plan will include Far East National Bank (100% owned by Bank SinoPac), SinoPac Life Insurance Agent, SinoPac Property Insurance Agent, and a future venture capital company, said Paul C. Lo, CEO of SinoPac Holdings.

The boards of Bank SinoPac and National Securities approved the consolidation plan today and will commence implementation accordingly. Both parties have assigned independent accountants to conduct due diligence and decide the stock exchange ratio. An extraordinary shareholder's general meeting is scheduled in November to elect the board members. The founding application for the holding company will be submitted to the Ministry of Finance in due time. SinoPac Holdings is expected to pioneer the role of financial holding company in Taiwan.