HSBC Finance Corporation to Acquire Card Issuer Metris for $1.6 billion

PROSPECT HEIGHTS, IL and MINNETONKA, MN – HSBC Finance Corporation (HSBC Finance) and Metris Companies Inc. have entered into a definitive agreement for HSBC Finance to acquire Metris in an all-cash transaction which values Metris at US$1.594 billion. Upon completion, Metris will become a wholly-owned subsidiary of HSBC Finance.

HSBC Finance, headquartered in Prospect Heights, Illinois, through its subsidiaries and affiliates, is the sixth largest issuer of MasterCard and Visa cards in the nation. Metris, with headquarters in Minnetonka, Minnesota and offices in five states, is the 11th largest issuer of MasterCard and Visa cards in the United States with managed receivables of approximately US$5.9 billion. Metris primarily serves the near-prime credit card market through direct mail and partnership affiliations.

“HSBC Finance is a major provider of near-prime consumer finance credit in the United States and this acquisition deepens our capabilities to serve the full spectrum of credit card customers,” said Bobby Mehta, Chairman and CEO of HSBC Finance Corporation. “We are very familiar with Metris and its management team and look forward to the integration of their business within HSBC.”

Metris was formed in 1994 and became a public company in 1996. The company issues credit cards through Direct Merchants Credit Card Bank, N.A., a wholly-owned subsidiary headquartered in Phoenix, Arizona.

“Being part of a world-class organization such as HSBC is a logical step following our successful turnaround of the business,” said David Wesselink, Chairman and CEO of Metris. “HSBC and Metris will make a terrific combination, continuing to serve the needs of our customers.”

Under the terms of the merger agreement, Metris common stockholders will be entitled to receive US$15.00 for each share of Metris common stock for a transaction that closes on or before December 9, 2005. After December 9, 2005, the price per common share to the common stockholders will decrease by an amount based on the pay-in-kind dividends that accumulate on Metris’ Series C Preferred Stock (“Preferred Stock”), in accordance with its terms. For illustrative purposes only, if the closing was on March 31, 2006 (the latest date on which closing could occur under the terms of the contract), the common stockholders would receive $14.82 per share. The transaction is currently anticipated to close in the fourth quarter of 2005.

The Board of Directors of Metris has unanimously approved the transaction, as has the Board of Directors for HSBC Finance.

As part of the total consideration, the Preferred Stock held by Thomas H. Lee Partners, L.P. will receive, in accordance with its terms, approximately $682.6 million if the transaction closes on or before December 9, 2005. Subsequent to December 9, 2005, the amount payable on the Preferred Stock will be increased based on the pay-in-kind dividends that accrue on the Preferred Stock in accordance with its terms. The holders have given an irrevocable proxy to HSBC Finance to vote in favor of the transaction. These shares represent approximately 44 percent of the voting rights of Metris stockholders. Total consideration payable to common stockholders, on or before December 9, 2005, is approximately $911.1 million.

The acquisition is subject to certain conditions including resolution of the potential civil enforcement action of the Securities and Exchange Commission against Metris as described in Metris’ Form 8-K dated July 12, 2005, approval by the stockholders of Metris and various regulatory consents.

HSBC Finance is a subsidiary of HSBC North America Holdings Inc., one of the top 10 financial organizations in the United States with assets totaling more than US$300 billion. Both companies are wholly-owned subsidiaries of HSBC Holdings plc (HSBC) which is headquartered in London and is the holding company of the HSBC Group, one of the largest banking and financial services organizations in the world, with well established businesses in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. As of June 30, 2005, the HSBC Group had total assets of US$1,467 billion. HSBC is listed on the London, New York, Hong Kong, Paris and Bermuda stock exchanges.

Goldman, Sachs & Co. acted as the lead financial advisor to Metris. UBS Securities LLC was also a financial advisor to Metris. HSBC Securities (USA) Inc. acted as financial advisor to HSBC Finance.