HSBC 2002 Annual Report Download - page 13

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representing an ownership interest in five HSBC
ordinary shares), with any right to fractional interests
being satisfied by a cash payment. Upon completion
of the merger, each issued and outstanding share of
Household non-voting preferred stock will be
cancelled and converted into the right to receive cash
in the amount of $1,000 per share ($25 per
depositary share representing 1/40th of a share), plus
all accrued and unpaid dividends up to but excluding
the closing date, without interest. The agreement
remains subject to a number of conditions including
shareholders’ approval of both HSBC and Household
and regulatory approvals. A Discloseable Transaction
Circular was sent to HSBC’s shareholders on 28
February setting out, inter alia, reasons for and
benefits of the acquisition. A registration statement
on Form F-4 describing the transaction has also been
filed with the US Securities and Exchange
Commission. These may be found on HSBC’s
website www.hsbc.com.
The acquisition, which is expected to be
completed around the end of the first quarter of
2003, will significantly increase the contribution
from HSBC’s North American operation. In
particular, Household offers HSBC national coverage
in the US for consumer lending, credit cards and
credit insurance through varied distribution channels
including approximately 1,400 offices in 46 states.
Further information on Household, including its
filings with the SEC, may be found on the
company’s website, www.household.com.
In further support of HSBC’ s investment
banking business, particularly in the United States, in
May 2002 HSBC Holdings plc and AEA Investors
Inc. (‘AEA’ ) agreed in principle that HSBC will
invest up to US$750 million over the next five years
in a new US$1 billion plus private equity fund. In
February, 2003, the fund completed its first closing
for US$912 million, of which HSBC’s share is
US$638 million. The fund will enhance HSBC’ s
existing involvement in the private equity sector
through entry to the US private equity market. HSBC
will be a limited partner in the fund.
Mainland China remains a critical growth area
for the Group. In November 2002, HSBC completed
the acquisition of a 10 per cent equity stake in Ping
An Insurance Company of China Limited at a cost of
US$600 million. Ping An Insurance is the second-
largest life insurer and the third-largest insurer in the
People’s Republic of China with over 25 million
policyholders, some 21,500 employees and over
200,000 licensed agents.
Expansion of wealth management services
remains another priority. In late December 2002,
HSBC agreed to acquire Keppel Insurance Pte
Limited. The acquisition was completed on 18
February 2003 at a price of S$154 million
(approximately US$88 million) in cash. Keppel
Insurance was established in Singapore in 1954 and
provides a full range of life and non-life insurance
products and services. It is also the market leader in
Takaful (Islamic) insurance in Singapore.
On 28 June 2002, Merrill Lynch HSBC
(‘MLHSBC’ ) became a wholly owned subsidiary of
HSBC. MLHSBC was formed as a 50:50 joint
venture between HSBC and Merrill Lynch in April
2000 to provide direct investment and banking
services, primarily over the internet, to mass affluent
investors outside the US. It currently operates in
Australia, Canada and the UK.
Working with HSBC’s private banking business,
HSBC USA Inc. employed in July 2002 certain
partners and staff of Arthur Andersen LLP’s US
Private Client Practice, who have joined a new
HSBC Private Client Services Group (‘WTAS’ ) in
the US, serving the wealth and tax advisory needs of
high net worth individuals.
HSBC continued to build in areas where it has
significant strengths and, in 2002, made
opportunistic investments in France, Turkey and
Malaysia.