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Further to the Company's announcement on 10 August 2004, CIMB is pleased to announce that the Company had on 18 August 2004 entered into the following agreements with CAHB:

(i) a conditional share sale agreement for the Proposed CTB Acquisition (CTB SSA); and

(ii) a conditional share sale agreement for the Proposed CAFM Acquisition (CAFM SSA).

(The Proposed CTB Acquisition and Proposed CAFM Acquisition are collectively referred to as the Proposed Acquisitions)

The Proposed Acquisitions are inter-conditional.

The Proposed CTB Acquisition entails CIMB acquiring the 4,900,000 CTB Shares free from all security interests, liens, encumbrances or other claims and together with all rights and benefits whatsoever attaching thereto as at the date of completion of the CTB SSA.

The salient details of the CTB SSA are as follows:

2.1.1 Basis of the purchase consideration

The purchase consideration of RM17,000,000 or approximately RM3.47 per share for the Proposed CTB Acquisition was arrived at based on a willing buyer-willing seller basis after taking into consideration the audited net tangible assets (NTA) of CTB as at 31 December 2003 and the earnings potential of CTB.

2.1.2 Satisfaction of the purchase consideration

The purchase consideration for the Proposed CTB Acquisition will be satisfied wholly in the form of cash and will be financed by CIMB from internally generated funds and/or borrowings. The purchase consideration will be paid fully to CAHB on the date of completion of the CTB SSA. There are no liabilities to be assumed by CIMB pursuant to the Proposed CTB Acquisition.

2.1.3 Condition of the CTB SSA

The CTB SSA is conditional upon the approvals being obtained from all regulatory authorities, as set out in Section 5 herein, and the completion of the CAFM SSA.

The Proposed CAFM Acquisition entails CIMB acquiring the 3,850,000 CAFM Shares free from all security interests, liens, encumbrances or other claims and together with all rights and benefits whatsoever attaching thereto as at the date of completion of the CAFM SSA.

The salient details of the CAFM SSA are as follows:

The purchase consideration of RM18,000,000 or approximately RM4.68 per share for the Proposed CAFM Acquisition was arrived at based on a willing buyer-willing seller basis after taking into consideration the audited NTA of CAFM as at 31 December 2003 and the earnings potential of CAFM.

2.2.2 Satisfaction of the purchase consideration

The purchase consideration for the Proposed CAFM Acquisition will be satisfied wholly in the form of cash and will be financed by CIMB from internally generated funds and/or borrowings. The purchase consideration will be paid fully to CAHB on the date of completion of the CAFM SSA. There are no liabilities to be assumed by CIMB pursuant to the Proposed CAFM Acquisition.

2.2.3 Condition of the CAFM SSA

The CAFM SSA is conditional upon the approvals being obtained from all regulatory authorities, as set out in Section 5 herein, and the completion of the CTB SSA.

2.3 Original Cost of Investment and Dates of Investment to CAHB
CAHB had acquired the 4,900,000 CTB Shares on 1 November 2000 for a total purchase consideration of RM6.04 million and the 3,850,000 CAFM Shares were acquired by CAHB from 10 July 1995 to 1 November 2000 for a total purchase consideration of RM4.13 million.

The Proposed Acquisitions will enable CIMB to participate in the fund management and unit trust business through the 70% equity interest holding in CTB and CAFM respectively. This strategic move would result in CIMB having the full complement of capital market activities and enable CAHB and its subsidiaries to synergise all their capital markets operations to extract maximum value. The Proposed Acquisitions will also present opportunities for CIMB to expand and diversify its earnings base by increasing its annuity income streams.

4.1 Industry Prospects

The unit trust industry registered strong growth with increased volume of units in circulation, number of accounts and unit trusts in 2003. During the first six months of 2003, 23 new funds were launched (2002: 26 funds), bringing the total number of unit trust funds to 195. Subsequently, the net asset value (NAV) of the industry increased by 18.2% to RM63,486 million (end-2002: RM53,698 million). The portion of NAV contributed by the Government-sponsored funds, declined from 61% to 58%, reflecting an improvement in private sector participation in the investment management industry.

(Source: Economic Report 2003/2004)

The environment in which capital market activity takes place has become increasingly dynamic, competitive and globalised, driven by a combination of factors, including advances in financial techniques and computing technology; the deregulation of financial activity in many jurisdictions; and the changing patterns of fund raising and investment.

As pension systems in other markets grow larger and as global wealth increases, there will need to be more efficient channels through which this wealth can be invested, resulting in rising demand for more competitively managed investments. Commensurate with the expected increase in liquidity pools, the intermediation of funds in emerging economies is expected to become increasingly capital market-based as they compete with more developed markets for global funds. Improvements in communications technology and greater consumer awareness of the availability of alternative investment destinations other than the domestic market are also likely to accelerate the growing mobility of funds.

(Source: Capital Market Masterplan Malaysia)

Recognising the strategic role of the fund management industry in the development of Kuala Lumpur as a financial centre, the Securities Commission (SC) initiated a multi-pronged approach for its development. These measures included the streamlining of its regulatory framework, deregulation of certain restrictions and development of other reforms of collective investment schemes. In this regard, the SC issued the Guidelines for the Establishment of Foreign Fund Management Companies to maximise the opportunities brought about by liberalisation, increased customer sophistication, growth of institutional funds and the presence of foreign fund managers. To further strengthen the fund management industry, the Futures Industry Act 1993 was amended to facilitate the participation of fund managers and unit trust management companies in futures trading with the aim of hedging their investment portfolio.

Efforts will also be taken to develop a more competitive and vibrant investment management industry, as it is central to mobilising domestic savings more effectively. Emphasis will be focused on ensuring a significant number and diversity of industry players with greater access to a larger pool of funds available for management; developing a large pool of highly skilled professionals to foster greater innovation and competitiveness in the industry; and ensuring a more facilitative framework. In this regard, there will be further deregulation of the investment management industry to allow for the development of a larger number and diversity of industry players with greater access to funds available for management. The development of a private pension fund industry will also facilitate, to supplement the national pensions system and provide for greater competition and diversity in the institutional management of private funds and to ensure the capital market mobilises and allocates funds effectively.

In order to develop a diverse group of active institutional investors to stimulate secondary market trading, the Government will encourage the setting up of fixed income bond funds. To further broaden the investor base, a study will be undertaken to restructure the Employee Provident Fund Board (EPF) with the objective of transforming it into more efficient, manageable and focused pension funds units. Consideration will also be given to allow corporates to set up superannuation funds to capture employee contributions in excess of the mandatory EPF deductions and extending tax incentives to these retirement funds as a mean to diversify the countrys long-term savings pool.

(Source: Eighth Malaysia Plan 2001-2005)

4.2 Risk Factors

The various risks inherent to the unit trust and fund management industry are as set out below:

The growth of the capital markets is significantly dependent on the performance of both the domestic and global economies. Accordingly, the businesses of CTB and CAFM are susceptible to the risks posed by volatility of economic growth, with regards to changes in the capital market, both the equity and debt markets.

Any adverse developments in political, economic and regulatory conditions, whether domestically or outside the country could materially affect the financial and operational conditions and eventually profitability of CTB and CAFM. The political and economic uncertainties include risk of war, a global economic downturn, expropriation, nationalisation, fluctuations in interest rates, foreign exchange rates, inflation, taxation and unfavourable changes in government policies such as the introduction of new regulations.

Upon completion of the Proposed Acquisitions, CIMB will be directly exposed to the risks inherent in the ordinary course of business relating to the unit trust and fund management industry. These include, inter-alia, fluctuation in the performance of the stock market, fixed-income securities market and the private debt securities market and compliance risk in relation to rules and regulations imposed by the Securities Commission.

Although CIMB will seek to limit these risks by, inter-alia, prudent risk management and internal control policies and maintaining strict adherence to regulatory rules, there is no assurance that the abovementioned risks will not have a material adverse effect on the future performance of both CTB and CAFM.

CTB and CAFM operate in a competitive and rapidly changing industry where their ability to compete depends on many factors within and outside its control, such as (but not limited to) performance and reliability, pricing, value for money and resources of competitors.

The ability of CTB and CAFM to compete successfully against existing and future competitors may have an impact on the earnings of CTB and CAFM.

The Proposed Acquisitions are subject to and are conditional upon approvals being obtained from, amongst others, the following:

(i) Bank Negara Malaysia;

(ii) SC; and

(iii) SC (on behalf of the Foreign Investment Committee).

Upon completion of the Proposed CTB Acquisition, CIMB would hold 70% of the issued and paid-up share capital of CTB. Pursuant to Part II of the Malaysian Code on Take-Overs and Mergers 1998 (Code), CIMB will be obliged to undertake a mandatory offer to acquire the remaining shares in CTB it does not already own pursuant to the Proposed CTB Acquisition, in the event that Principal Financial Australia (Holdings) Pty Ltd does not give a letter of undertaking not to accept an offer pursuant to an exemption to be sought under Practice Note 2.9.6 of the Code.

Pursuant to Chapter 10.08 of the Listing Requirements of Bursa Malaysia Securities Berhad, the Proposed Acquisitions are related-party transactions as they involve the interests of CAHB, as vendor for the Proposed Acquisitions, which is also a substantial shareholder of CIMB.

Dr. Rozali Mohamed Ali is a common Director of CAHB and CIMB and is therefore deemed interested in the Proposed Acquisitions. He has abstained and will continue to abstain from all deliberations and voting on the relevant resolutions pertaining to the Proposed Acquisitions at the relevant meetings of the board of Directors (Board) of CIMB.

Save as disclosed in Section 7 above, as far as the Directors of CIMB are aware, none of the Directors, substantial shareholders of CIMB and/or persons connected to them has any interest, direct or indirect, in the Proposed Acquisitions.

The Board, having considered all aspects of the Proposed Acquisitions, is of the opinion that the Proposed Acquisitions are in the best interest of CIMB.

The Proposed Acquisitions are expected to be completed by the fourth quarter of the financial year ending 31 December 2004.

As far as the Board is aware, there is no departure from the SCs Policies and Guidelines on Issue/Offer of Securities in respect of the Proposed Acquisitions.

The SSAs are available for inspection at the registered office of the Company at 7th Floor, Bangunan CIMB, Jalan Semantan, Damansara Heights, 50490 Kuala Lumpur during the normal business hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.

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