ABC focusing on growing Arab World business and maintaining global reach

This followed the review of bids from several European banks. ABC decided to accept the Sabadell offer as being the most favourable from various perspectives including price and other financial terms. A sale and purchase agreement has been signed on December 21, 2003, and it is expected that the transaction will close in a few months after receiving approvals from Spanish authorities, including Bank of Spain.

ABC acquired a 70% stake in Banco Atlantico in 1984. Over the years ABC grew the franchise and Banco Atlantico's total assets increased substantially from US$2.2 billion to US$11.6 billion as of November 30, 2003. Banco Atlantico has 272 branches today, compared to the 194 branches it had when ABC took over in 1984. It also has subsidiaries and representative offices worldwide. Despite the sale of Banco Atlantico, Spain remains an important market and source of income for the ABC Group. We are assessing opportunities to pursue trade finance between Spain and the Arab World.

ABC's 55% stake in International Bank of Asia ("IBA") is also being sold - to the Fubon Group, a financial services group based in Taiwan - and the transaction is expected to be closed by February 10, 2004, upon receipt of approvals from the Hong Kong, and Taiwanese regulatory authorities. ABC originally acquired 75% of IBA in 1985 which was reduced in 1993 through partial sale. IBA's total assets in 1985 stood at US$0.5 billion, with 16 branches. With the support of ABC, IBA's new management team established a successful retail franchise with total assets rising to US$4.9 billion by the end of November 2003, with 25 branches. For the time being, ABC will continue to assess the potential of its Arab related business in the Asian region through its representative office in Singapore while the current business flows from the region are handled out of Bahrain.

Despite the sustained and profitable growth of both Banco Atlantico and International Bank of Asia, an in-depth study of strategic options available to ABC in light of the dramatic changes in the global banking industry concluded that it was in the interest of ABC to dispose of its investments in Banco Atlantico and IBA if market conditions were favourable. ABC's origins were in the Arab World and the strategic study identified the rapidly emerging opportunities for expansion in our home region. The growing demand for retail banking services, including consumer lending, trade finance and small and medium size enterprise finance, provides significant growth potential. These needs can be met through the building of a network of operating units throughout the region while maintaining ABC's additional wholesale banking franchise internationally. The sale of Banco Atlantico and IBA frees up substantial capital resources to support this strategic initiative.