Fitch Ratings Affirms HSBC Finance; Places Metris On Rating Watch Positive

Business Wire, August 4, 2005

CHICAGO -- Fitch Ratings has affirmed HSBC Finance Corporation's (HSBC Finance) ratings and placed Metris Companies Inc.'s (Metris) ratings on Rating Watch Positive. HSBC Finance operates as an indirect wholly-owned subsidiary of HSBC Holdings plc (HSBC). Fitch currently rates HSBC 'F1 /AA-'. A complete list of HSBC Finance's and Metris ratings is detailed at the end of this release. Approximately $115 billion of HSBC debt and $78 million of Metris debt is affected by this action.

HSBC Finance announced today the acquisition of Metris in a cash transaction totaling approximately $1.6 billion. Fitch believes this acquisition complements HSBC Finance's existing credit card business by providing additional scale in the rapidly consolidating U.S. credit card segment. Moreover, Fitch believes the continuing improvement in the Metris credit card portfolio mitigates concerns surrounding the relative difference between Metris and HSBC Finance's general purpose credit cards. For Metris, the acquisition addresses the company's relative funding disadvantage as well as the intensifying competitive environment for credit card issuers. HSBC may also realize ancillary benefits such as additional cross-sell opportunities with the addition of the Metris customer base.

Fitch expects HSBC to receive an equity infusion to fund this transaction. Capital infusion further demonstrates the linkage between HSBC and HSBC Finance. Fitch expects that following this equity issuance, HSBC Finance capital ratios will be unchanged post acquisition. Fitch expects to equalize the ratings of Metris to HSBC Finance and withdraw them when the transaction closes in the fourth quarter of 2005.

Fitch has placed the following ratings on Rating Watch Positive:

Metris Companies Inc.

--Senior unsecured debt 'B-';

Direct Merchants Credit Card Bank N.A.

--Long-term 'B';

--Short-term 'B'.

Fitch affirms the following ratings with a Stable Outlook:

HSBC Finance Corporation

--Senior debt 'AA-';

--Preferred stock 'A ';

--Individual 'B/C';

--Commercial paper 'F1 ';

--Support '1'.

Household Capital Trust I, III, VI and VII

--Preferred stock 'A '.

Household Bank (Nevada) N.A.

--Senior debt 'AA-';

--Short-term debt 'F1 ';

--Individual 'B/C';

--Support '1'.

Household Bank International Netherlands BV

--Senior notes 'AA-'.

HSBC Financial Corporation Limited (Previously -- Household Financial Corp., Ltd.)

--Senior debt 'AA-';

--Senior debt shelf 'AA-'.

HFC Bank Ltd

--Euro medium-term notes 'AA-';

--Guaranteed deposit programme: long-term 'AA-';

--Guaranteed deposit short-term programme 'F1 ';

--Individual 'B';

--Support '1'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.