DBS Offers To Buy OUB

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Combined Bank to be Singapore's Leading Bank in the Region and Globally

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"Our Strategy is Simple: To Be the Best Bank in Asia"

SINGAPORE, JUNE 22 - DBS Group Holdings Ltd ("DBS") today announced its intention to make a general offer for all of the outstanding shares of Overseas Union Bank Ltd ("OUB").

DBS' offer, which consists of 0.61 DBSH shares and S$1.14 in cash for every OUB share tendered, values OUB at S$9.50 per share for a total of S$9.4 billion or approximately 1.83x December 31, 2000 book value. This offer represents a premium of 11.1% to OUB's closing share price of S$8.55 as of June 21, 2001, and 36.6% to the 60-day average closing price. The offer is conditional upon greater than 50% minimum acceptance and certain other conditions.

DBS says consolidation is good for Singapore

DBS is currently the largest commercial banking group in Singapore and Southeast Asia. It has leading market shares for its core product lines and the most extensive branch and ATM networks in Singapore. Notwithstanding this leading position, DBS is one of five main commercial banks in Singapore.

Mr. S. Dhanabalan, Chairman of DBS, said: "We welcome consolidation, which is not only inevitable but is good for DBS, OUB and our respective shareholders. It is in Singapore's best interests.

"The world is changing. Our banks need to be larger, stronger and more efficient as our competition is increasingly coming from large global financial conglomerates.

"We are also cognizant of our leading role in Singapore and in Asia. We believe our proper role is to help lead and shape consolidation in Singapore. Moreover, we should help lead the development of the banking sector in Asia generally.

"After the acquisition of OUB and Dao Heng, we will have grown our asset base from less than US$40 billion at the end of 1997 to over US$100 billion today. This will make us the third largest bank in Asia, outside of Japan, and the only Asian bank with a significant presence in Singapore and Hong Kong.

Strategic rationale is compelling

"We are building the Best Bank in Asia," Philippe Paillart, CEO of DBS said.

"We are currently the market leader in Singapore in all our core businesses. However, this acquisition will strengthen us further in our domestic market, provide us with greater access in Malaysia and further broaden our franchise throughout Asia.

"DBS and OUB together will be a powerful combination," Mr Paillart continued, "but the big winners with this acquisition are our combined customers, employees and shareholders.

"Our customers will access to the widest range of quality products and services across Asia. Our combined employees will be part of a major regional franchise that will deliver world-class financial services. And our shareholders will own a Pan Asian Franchise that is managed for value and growth. It will be a bank that will engage the best talent, employ the very latest in technology and innovation to create a great customer experience throughout Asia."

Jackson Tai, President and Chief Operating Officer of DBS, added:

"Around the world, financial institutions are consolidating as national borders become irrelevant to the flow of capital and the provision of financial services. DBS intends to be at the forefront of these changes in Asia and wants to be both a leader and a formidable competitor in our core markets.

"Our strategy has been clear - managing for growth and value.

"We began the year with our acquisition of Vickers Ballas, which together with our TD Waterhouse joint venture announced on Wednesday, builds out our integrated financial services suite.

"We then announced our acquisition of Dao Heng in Hong Kong. This has enabled us to diversify regionally, and fortify our second pillar in Greater China. Dao Heng was an acquisition for growth.

"We have also focused on making our capital structure more efficient, and divesting our non-core assets. These initiatives have been undertaken to enhance shareholder returns proactively.

"Now with our announced purchase of OUB, we are able to leverage efficiently the infrastructure that we have painstakingly built over the past few years. Not only does OUB cement our leading position in Singapore, but bolsters our scale and provides valuable synergies. OUB will also give us a solid presence in Malaysia, which is an important market for us."

Mr. Tai concluded: "We also expect to create value for our combined shareholders as we generate synergies. These will come from rationalizing our branch network, consolidating back office and IT functions and reducing overlap of our respective businesses."

DBS' superior equity story is key basis for offer

DBS has significantly expanded its business and operations in recent years, both in Singapore and regionally. With the acquisitions of POSBank and DBS Thai Danu Bank in 1998, DBS Kwong On Bank in Hong Kong in 1999 and the minority investment in The Bank of the Philippine Islands in 1999 and 2000, DBS has become the leading bank in Singapore and the largest bank in Southeast Asia. DBS has also expanded the range of its business with new and better product offerings, as well as through its acquisition of Vickers Ballas, the leading securities brokerage in Singapore, which also has a strong regional presence.

Over the last 5 years, DBS' total assets almost doubled from S$55.7 billion at the end of 1996 to S$111.2 billion at the end of 2000. On a pro forma basis, adjusting for Dao Heng Bank Group Limited ("Dao Heng") and OUB, DBS assets would have more than tripled to S$193 billion.

DBS' market capitalization has also increased significantly over this period, with total market capitalization of S$6.3 billion at the end of 1996 to S$23.8 billion at the end of 2000, while key indicators of shareholder value creation have also increased. Return on equity increased from 10.3% in 1996 to 12.9% in 2000.

DBS said that key business and shareholder value creation statistics support its offer, especially when compared with similar statistics for OUB. The following table sets forth a comparison of key statistics:

(1) December 31, 2000, pro forma for the acquisitions of OUB and Dao Heng
(2) From public sources

Mr Tai said: "The facts speak for themselves - we have demonstrated our superior equity story. We believe we are the best manager for the OUB business and franchise and we are best positioned to create shareholder value:

"We have an unparalleled record of creating value through careful management of our core business; we have also been a leader in divesting non-core assets;

"We have built an unmatched regional franchise and we are poised for future expansion; and

"We have been a leader in capital management, and we are sharply focused on cost management and improving our shareholder returns."

DBS says now is the time to move

Mr Paillart said: "The benefits of our offer are clear. We expect that OUB's Board and its management will see the attractive benefits that accrue to OUB's shareholders.

Mr Paillart continued: "The strategic logic is very compelling. This offer makes economic sense for OUB and its shareholders; it makes sense for DBS and our shareholders; and it makes sense for Singapore.

"Given that all constituencies win with this offer, we are serious and resolute in our intent and will pursue this matter to a successful conclusion."

Mr. Tai stated:

Let me elaborate on why we have made this offer at this particular time. We have said in the past that we were happy with our position in Singapore and that our focus was on regional acquisitions. But, at the same time, we have been continually reviewing our options domestically. We think OUB makes great strategic sense given the rapidly changing market in Singapore. We have always respected and admired OUB, their franchise and the way they do business. And we firmly believe that DBS and OUB together is a great combination and a powerful regional competitor.

"We were pleased to see OCBC's for Keppel as an indication that other banks share our view that consolidation is both right and inevitable. Their bid is another indication that the landscape is changing.

"Since we pride ourselves on being a leader in Singapore and in helping guide important developments here, we owe it to ourselves, our customers, our employees and our shareholders to maintain our position. With this in mind, it is clear we must act now, and we have decided to accelerate our timetable.

Mr. Tai concluded: "We are comfortable moving now. We have made a lot of progress on the announced acquisition of Dao Heng; and I am happy to say the results so far are very encouraging. We have completed our integration planning, we have a fully staffed integration team and we are ready to launch a smooth integration as soon as the acquisition is complete."

DBS says experience and the strong integration team will help ensure successful acquisition.

Since 1998, DBS has completed and integrated a number of significant acquisitions. These include POSBank and DBS Thai Danu Bank in 1998 and DBS Kwong On Bank in 1999. DBS is also in the process of completing acquisitions for Dao Heng and Vickers Ballas.

As part of the integration of these acquisitions, DBS was able to rationalize its domestic branch network from more than 170 branches to just over 100 branches. This was achieved while DBS grew its asset base, operations and franchise.

In addition, DBS said it was able to integrate successfully its regional operations. In Thailand, as part of the integration of DBS Thai Danu Bank, DBS successfully rationalized its branch network by closing 36% of its branches, rationalized its staff levels, and sold almost all of its non-performing loans, reducing NPLs by 85% and bringing its NPL ratio down to 7.4%. DBS also integrated IT, back office, risk management and other systems with the head office in Singapore. These initiatives have helped make DBS Thai Danu Bank one of the more efficient and profitable banks in Thailand and the strongest bank in terms of asset quality.

In Hong Kong, DBS was able to reduce NPLs by 63% to 5.6% of total loans. DBS Kwong On Bank has also significantly expanded its business lines and has issued over 60,000 credit cards in the first half of 2001, with a target of 100,000 by year end without the acquisition of Dao Heng. DBS has also focused on upgrading IT and processing and servicing capabilities and integrated key systems with the headquarters office in Singapore.

Mr. Paillart said: "We have developed more integration experience and know-how than any other bank in Asia and we have a proven track record in some of the more difficult markets and under demanding economic circumstances. We have no doubt we will be able to integrate OUB in a smooth and effective manner in our home market.

"We are very proud of our strong management team and we know we are best positioned to make this acquisition work." The opportunity to scale our business with a large bank like OUB is precisely why we have built up a team of seasoned managers at DBS since 1998."

Mr. Tai added: "Synergies, cost savings and growth opportunities will enhance our earnings power and capital flexibility. I am extremely pleased to say that we have some of the most experienced and seasoned people in the business who will help us generate these synergies. We will work to make this acquisition succeed, and we have the right people to see that it happens smoothly, seamlessly and quickly".

"The four key members of our integration team have more than 100 years combined experience in banking and financial services and they are among the most experienced banking professionals in Asia. All four are Singaporeans and have spent most of their professional careers in financial services. They are among our most senior and talented professionals. We have the utmost confidence in them."

DBS said the integration team will be headed by a team of four senior DBS managers:

• Chong Kie Cheong, Finance Director; Mr. Chong has been at DBS since 1971 and was appointed Finance Director in 2001. Prior to that, he headed the Regional Integration Centre, headquartered in Bangkok, which was responsible for the integration of DBS' operations in Hong Kong and Thailand;
  
• Edmund Koh, Managing Director, Consumer Banking Group; Mr. Koh heads DBS Group Marketing, a role which includes leading banking product development initiatives. Prior to his current appointment, he was the CEO of the joint venture bank between OCBC and ANZ. Shortly after assuming that position, Mr Koh took the decision to wind-up the proposed bank due to unfavourable financial returns, a decision well appreciated by the boards of directors from both banks. He was also previously CEO of Prudential in Singapore and has held several senior banking positions in Singapore, including with Citibank and HSBC;
  
• Oon Kum Loon, Managing Director, Risk Management; Ms. Oon is responsible for overseeing the framework to manage all credit, market and operational risks at DBS. She has been with DBS for over 27 years and was appointed Managing Director and Head of Risk Management Group in 1999; and
  
• Greg Seow, Managing Director, Consumer Banking Group. Greg Seow is Managing Director of DBS' Wealth Management Group, and is also Chairman of DBS Asset Management and DBS Vickers Securities. With over 21 years' experience in fund management and capital markets, Mr. Seow's principal responsibility is to enhance DBS' wealth management capabilities.
  

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OUB is the fourth largest bank in Singapore, with total assets of S$46.0 billion, total loans of S$29.7 billion and shareholders' funds of S$5.2 billion at 31 December 2000. OUB also has operates a banking subsidiary in Malaysia with total assets of approximately S$2.7 billion. The offer would enhance DBS' leading position in Singapore and provide further size and scale. In addition, DBS recently announced its intention to make an offer for Dao Heng in Hong Kong. With Dao Heng and OUB together, DBS will have pro forma total assets of S$193 billion and total loans of S$99 billion. This will make DBS the third largest bank in Asia, excluding Japan and the only bank with significant market positions in both Singapore and Hong Kong. The acquisition will also expand DBS' operations in Malaysia.

Note: Structure of the Offer

DBS intends to make a voluntary general offer for all of the outstanding shares of OUB. The offer consideration will consist of 0.61 DBSH shares and S$1.14 in cash for every 1 OUB share.

The offer will be subject to a number of conditions. These conditions include (i) acceptances covering more than 50 per cent. of the voting rights attributable to the issued share capital of OUB (ii) listing approval for the new DBS shares to be issued, (iii) shareholder approval for the Offer and the issue of the new DBSH shares pursuant to the Offer, (iv) MAS approval, (v) other appropriate regulatory approvals and (vi) certain other conditions, all as more fully set forth in the Offer Announcement.

Goldman Sachs (Singapore) Pte. is acting as Financial Advisor to DBS.

This Press Release should be read in conjunction with the full text of the Offer Announcement released by DBS on 22 June 2001

The Directors of DBS (including any who may have delegated detailed supervision of this Press Release) have taken all reasonable care to ensure that the facts stated in this Press Release are fair and accurate and that no material facts have been omitted from this Press Release, and they jointly and severally accept responsibility accordingly. Where any information has been extracted from published or publicly available sources (including, without limitation, in relation to OUB), the sole responsibility of the Directors of DBS has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this Press Release.