What has happened so far in the HSBC bid to take over the Bank of Bermuda :

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? Summer, 2003. Rumours begin to circulate about the possibility of the Bank of Bermuda, the Island?s largest financial institution, negotiating its sale to multinational banking giant, HSBC. At the time, this was neither confirmed nor denied by the bank or HSBC. It was later revealed that the two parties had been in talks since February, 2003.

? The proposed sale was officially announced on 28 October, 2003 at a joint Press conference of HSBC and Bank of Bermuda executives. Under the terms of the agreement, the Bermuda operation will retain the Bank of Bermuda name for at least five years. It will also be branded with the HSBC hexagon logo. The bank?s global operations are to be merged into HSBC offices and will no longer be known as the Bank of Bermuda.

? The $1.3 billion sale for the sale, if approved by shareholders and regulators, will see each bank investor get a $40 pay out from HSBC and a $5 special dividend from the bank. The price represents a 16.3 percent premium over the bank?s average closing price on the Nasdaq during the previous three months.

? The sale is endorsed by the bank?s management and board. It has also been given the green light by the Ministry of Finance, but it is still subject to regulatory and shareholder approval. A prudential review by the Bermuda Monetary Authority is to be completed within 90 days of the announcement, with the bank saying it expected to receive the BMA?s approval before the February 16 shareholder vote. Shareholders of record as of November 24 are eligible to vote for or against the bank?s sale to HSBC. Votes can be cast in person or by proxy, mail in, vote. A one-third quorum of voters must cast their ballots, and of those, a minimum of 75 percent must vote in favour for the sale to close.

? The price draws fire from some bank investors who say it is too low, while some Bermuda investment managers say the bank?s inefficiency and poor return on assets and equity in recent years make the sales price of $45 per share a good price for HSBC and investors.

? The bank says it has gone up on the sales block, after 114 years of going it alone, because of its having ?struggled? in recent years as it faced growing competition from leaner global rivals, as well as the challenges of operating in an environment of poor interest rates. Management also cited Government?s declared interest in opening up the financial services sector to foreign institutions as bearing on their decision to sell out.

? As part of the sale, the bank says there will be up to 250 jobs cut in its Bermuda operations alone although it said some of those could be achieved through natural attrition.

Although both will be replaced, the first to be named as losing their jobs were CFO Edward Gomez and CEO Henry Smith. Mr. Gomez?s job will reportedly go to an HSBC appointed chief financial officer while Mr. Smith is to leave the bank within a year of the sale. It was announced that he will be replaced by Philip Butterfield who currently holds the number two spot as chief operations officer.

? Proxy information released to shareholders reveals details of a fairness opinion on the sales price for the bank by leading investment firm Merrill Lynch. It is also reported that Merrill stands to make some $10.8 million and costs if the sale goes through. It is only to be paid $600,000 if shareholders vote down the take over.

? Proxy materials also show that five of the bank?s senior management will profit handsomely if they cut 150 jobs in the first year and retain 70 percent of those employees that HSBC and the bank specify as ?key? to the operation.

Those to be paid the bonus, if achieving the set targets, are CEO Henry Smith, COO Philip Butterfield, head of private client services Wayne Chapman, head of banking services Michael Collins and head of the bank?s fund administration arm, Global Fund Services, Paul Smith. Together they could be due $6.6 million in cash and a further $4.7 million in HSBC shares that would vest in three years.

? It is said that Mr. Smith?s bonus payment is not tied to the targets, and he is to be paid the millions when he leaves the bank.

? Millions of dollars may also be made off of options that will become fully vested if the sale goes through. Proxy information reported that a significant number of Bank of Bermuda stock options are held by board members and senior executives. The shares that directors and senior management held, as of the record date for the HSBC vote, which was 24 November, was greater than 2.5 million. Those options, with 112,552 held by directors and some 2.4 million by senior management, are exercisable at an average price of $35.59 and $33.92 respectively.

Breaking down the profit that senior management could collectively earn off their as yet unexercised option, adds up to an imputed profit of nearly $27 million. With an average exercise price of $33.92, the executives will make an imputed $11.08 on each of their options when the $45 pay out is made. At $11.08 on 2.4 million shares, the executives stand to make a profit together of nearly $27 million.