DBS BANK TO MAKE A VOLUNTARY CONDITIONAL OFFER TO ACQUIRE KWONG ON BANK

The Development Bank of Singapore Ltd. ("DBS Bank") announces that it will be making a voluntary conditional offer ("the Offer") to acquire the entire issued share capital of Kwong On Bank, Limited ("Kwong On Bank"), a Hong Kong incorporated bank. The Offer will be made via DBS Bank’s wholly owned subsidiary, DBS Group Holdings (Hong Kong) Ltd., incorporated in Bermuda. Morgan Stanley will be making the offer on behalf of DBS Group Holdings (Hong Kong) Ltd. The Offer will be financed from DBS Bank’s internal resources.

DBS Bank has received irrevocable undertakings in respect of 65.0% of Kwong On Bank from The Fuji Bank, Limited (36.5%), Kwong On Holdings Limited (13.6%) and certain members of the Leung and Chang families (14.9%) to accept the Offer. As part of the Offer the Leung and Chang families could acquire up to a 16.6% interest in DBS Group Holdings (Hong Kong) Ltd.

The making of the Offer is subject to the satisfaction of certain preconditions including the necessary regulatory approvals.

Transaction Structure

The Offer will allow Kwong On Bank shareholders to choose among three forms of consideration:

• cash of HK$9.50 per Kwong On Bank share
• cash of HK$9.00 and a contingent unit (explained below) per Kwong On Bank share ("Cash and Contingent Unit")
• for every 6 Kwong On Bank shares, 5 Cash and Contingent Units and 1 share in DBS Group Holdings (Hong Kong) Ltd.

While Hong Kong banks have a better-than-average quality of assets in the region, the transaction structure has provisions designed to protect DBS Bank from asset quality deterioration in Kwong On Bank. DBS Bank has designed an option in the offer structure (through the contingent unit) which links the ultimate valuation of Kwong On Bank to its level of non-performing assets up to June 30, 2000. This will protect DBS Bank from the financial impact of further asset quality impairment in Kwong On Bank.

Transaction Rationale

The proposed acquisition of Kwong On Bank is part of DBS Bank’s regional expansion strategy which has included acquisitions of interests in banks in Singapore, Thailand, Indonesia and the Philippines over the past two years. DBS Bank’s directors believe that building a strong position in the relatively well-developed and sophisticated Hong Kong banking market is important to the DBS Bank Group in positioning itself as a leading banking group in the region.

The directors of DBS Bank believe that Kwong On Bank’s size, branch locations and diversified customer base offer DBS Bank a suitable platform to develop the DBS Bank Group’s interests in the Hong Kong market. The directors of DBS Bank also believe that there will be opportunities for DBS Bank to assist in the development of Kwong On Bank’s current business through the introduction of new products, transfer of technology and management processes and the sharing of DBS Bank’s marketing and product expertise. DBS Bank’s strategy is to reposition Kwong On Bank as a premier Hong Kong bank serving corporate and individual customers.

Management

The bank will be managed by DBS Bank, together with the Leung family. DBS Bank believes its partnership with the family, which has an intimate knowledge of the banking market in Hong Kong, will further enhance the franchise of Kwong On Bank. DBS Bank looks forward to a long term and successful partnership with the Leung family. Dr. Ronald Leung will continue as the Chairman of the Board and Mr. Kenneth Leung will remain as the Senior Managing Director and Chief Executive Officer. DBS Bank will appoint the Managing Director and Joint Chief Executive Officer of the bank who will be responsible for the management and integration of the bank with DBS Bank. DBS Bank will appoint the majority of the Board of Directors and the Executive Committee. The Chairman of the Executive Committee will be appointed by DBS Bank.

DBS Bank’s Branch in Hong Kong

DBS Bank will initially maintain its Hong Kong branch as an independent operation from Kwong On Bank in the event of a successful completion of the Offer. Over the long term and at an appropriate time, DBS Bank may merge its Hong Kong branch operations into Kwong On Bank. The decision in respect of any such transfer to Kwong On Bank would be affected by a variety of factors including the extent to which the Offer may be successful. The timing of any such transfer would also depend on the progress made in integrating the operations of Kwong On Bank into the DBS Bank Group (which is currently expected to take approximately 12 to 18 months). As such transfer is only in contemplation and at a preliminary stage, there is no certainty that any such transfer would occur and the nature, terms and timing of a transfer (if any) have not been determined.

Notes to Press Release

Business Description

Kwong On Bank, Limited

Kwong On Bank is a Hong Kong licensed bank with shareholders’ funds of HK$4.6 billion and total assets of HK$28.6 billion as of June 30, 1998. Kwong On Bank’s net profit after tax was HK$481.3 million for the year ended December 31, 1997 and HK$162.4 million for the six months ended June 30, 1998. The Kwong On Bank Group, through the Kwong On Bank’s head office, branches and subsidiaries, provides a broad range of banking, financial and related services to corporate and individual customers, principally in Hong Kong. The principal businesses of the Group are corporate and retail banking, foreign exchange and treasury services and other financial and related services to customers in the form of securities brokerage and nominee services, writing fire insurance and general insurance agency and property agency services. Kwong On Bank has a network of 1 head office and 31 branches located throughout Hong Kong and a representative office in Shenzhen, the PRC.

The Bank has a broad range of corporate and individual customers. Loans to corporate customers are usually extended for general operating purposes and to facilitate the purchase of commercial, residential, office or industrial properties for own use or investment purposes. A significant proportion of Kwong On Bank’s retail lending business comprises the provision to customers of mortgage loans in respect of Hong Kong commercial, residential, office and industrial properties. Security such as properties, deposits and listed securities support a significant portion of the Bank’s loan portfolio by value.

The Development Bank of Singapore Ltd.

DBS Bank and its subsidiaries (the "DBS Bank Group") is the largest banking group incorporated in Singapore in terms of shareholders’ funds and total assets as at 31 December 1997, being approximately S$7.2 billion and approximately S$65.2 billion respectively. The DBS Bank Group’s audited net profit after tax for the year ended 31 December 1997 was S$436.4 million and, based on unaudited accounts, the DBS Bank Group’s net profit after tax for the six months ended 30 June 1998 was S$178.6 million (excluding, in each case, the POSBank acquisition). DBS Bank is one the largest companies whose shares are listed on the Stock Exchange of Singapore in terms of market capitalisation. DBS Bank’s major shareholders are MND Holdings (Private) Limited (21.0%), Temasek Holdings (Pte) Ltd (19.0%), both of which are controlled by the Ministry of Finance in Singapore.

DBS Bank is a full-service bank, having diversified since its establishment in 1968 as a development financing institution. DBS Bank has 168 branches in Singapore; banking subsidiaries in Thailand, the Philippines and Indonesia; and branches and offices in the United States, United Kingdom, Japan, Hong Kong, India, Indonesia, Malaysia, Myanmar, the PRC, Taiwan, Korea and Thailand. It is also supported by its network of more than 900 correspondent banks.

DBS Bank is active in corporate, retail and investment banking. It is one of Singapore’s main sources of medium and long-term financing and is also actively engaged in providing short-term banking facilities, including trade financing and working capital financing. It also provides investment banking services, portfolio management services and custodian services. It offers a wide range of treasury services and is a major dealer in the US$/S$ foreign exchange market.