HSBC subsid transaction

HSBC Holdings PLC
30 May 2003

The following is an announcement issued by the John Lewis Partnership regarding
the joint management and operation of the John Lewis, Peter Jones, and Waitrose
storecard business by HFC Bank plc, an indirectly held subsidiary of HSBC
Holdings plc.



           JLP LINKS UP WITH HFC BANK TO ENHANCE STORE CARD OFFERING

John Lewis Partnership (JLP), the employee owned department store and
supermarket group, today announces that it is entering into a long-term
agreement with HFC Bank plc, a member of the HSBC Group, for the joint
management and operation of the John Lewis, Peter Jones and Waitrose store card
business.

The John Lewis Partnership has always placed great emphasis on a strong
relationship with its extremely loyal account holders, and the continuing
development of those links is a significant driver behind the new arrangements.
Under the agreement the parties will work together to develop the JLP card
business and to identify ways to enhance the card offering that are consistent
with JLP's brands. Both parties bring complementary strengths. HFC Bank will
bring its card knowledge, technology expertise and financing capabilities and
JLP will bring its retailing expertise, customer knowledge and a clear
understanding of the importance of the account card in its relationship with
customers. JLP and HFC Bank are committed to maintaining the card's current
competitive positioning, offering one of the lowest APRs of any store card on
the high street.

There will be no immediate change for existing cardholders in the way their
accounts are processed and customers do not need to take any action in response
to this announcement.

As part of the transaction, JLP will transfer all of the back office
administration functions relating to the JLP Customer Accounts business to HFC
Bank's Birmingham office. This move will affect around 130 full time posts and a
consultation process is underway with the Partners concerned. The transfer is
expected to be completed by the beginning of 2004.

The agreement, which will initially last for 7 years, includes the payment of a
£27m upfront premium to JLP, the transfer of £250m of existing account balances
to HFC Bank and an ongoing revenue sharing arrangement based on the success of
the card programme. The immediate financial effects of this move for John Lewis
Partnership will be a reduction in consumer receivables and headline debt of
£250m and operational cost savings of over £1m per annum. For accounting reasons
the premium will be spread over a number of years and the effect on the
Partnership's profits this year is expected to be neutral once reduced interest
income and restructuring costs are taken into account.

Charlie Mayfield, Development Director of John Lewis Partnership commented:

"The John Lewis Account Card has been very successful, with over 1.8 million
cards issued, and it remains a core part of our retail offering to customers.
The agreement with HFC Bank, will improve the financial position for the
Partnership, but most importantly it provides the basis for developing a card
offer that will strengthen the relationships we already enjoy with millions of
customers."

Ian Alexander, Group Finance Director of John Lewis Partnership added:

"Today's tie up with HFC Bank concludes a widespread review and consultation
exercise within the Partnership as to the best way to improve the financing and
efficiency of our card business. HFC Bank has extensive experience in the card
market and brings the significant card expertise, technology and financial scale
that will help us develop our card offering over time. The fact that they are
also part of HSBC Group, who are one of JLP's main relationship bankers, gave us
added comfort. Moreover, the transfer of £250m of debt from our balance sheet
gives us additional headroom to consider other investment opportunities as
appropriate."

Adrian Hill, Chief Executive of HFC Bank, said:

"We are delighted to be linking up with such a well known retailer as the John
Lewis Partnership, whose brands are synonymous with trust, service and quality,
key attributes for a card business. The combination of our respective skills
together with our joint commitment to customer service will enable us to create
a truly innovative and compelling card offering."

JLP has been advised on this transaction by Credit Suisse First Boston (Europe)
Limited.

Key facts about the JLP store card business

Formed in early 1960s

1.8 million registered cardholders

860,000 active store card users

Current store card benefits:

Up to 8 weeks interest free credit

APR of 13.0%, making it the lowest APR store card on the High Street (Mintel)

Special Offers on a range of leisure activities

Discounted tickets for selected shows and events

Complimentary copy of Waitrose Food Illustrated

Quick Check & Quick Pay scanning system in Waitrose stores


Notes to Editors


John Lewis Partnership:

The John Lewis Partnership operates 26 department stores across the country and
141 Waitrose supermarkets in Central and Southern England (one in Wales). It is
the UK's largest employee cooperative, with over 59,000 staff, known within the
group as "Partners". The company's shares are held in a Trust, for the benefit
of employees, and the business is managed by a combination of experienced
managers and elected representatives with a remit to ensure that everyone who
works for John Lewis can share in the benefits of ownership.


HFC Bank plc:

HFC Bank is one of the country's major credit card issuers, with over 3 million
customers in the UK and is one of the largest point of sale credit providers in
the UK for retailers such as PC World, Currys, Courts and Beatties. It is part
of the HSBC Group, one of the largest banking organisations in the world, and
has been successfully operating in the UK since 1974. Cards are issued under HFC
Bank's own brand, marbles, through major partnerships with organisations such as
Vauxhall Motors and through over 80 affinity arrangements with organisations
such as the RSPCA, IoD, Open University.



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