Cathay Financial Holding Co., Ltd.(the "company") hereby announces on behalf of its subsidiary CUB. the refusal of the bank to conduct negotiation.

2007-07-27

1.Date of occurrence of the event:2007/07/27 2.Company name:Cathay United Bank 3.Relationship to the Company (please enter ”head office” or ”affiliate company”):Affiliated company 4.Reciprocal shareholding ratios:100% owned subsidiary 5.Cause of occurrence:With respect to the alleged unauthorized sale in October 2003 by senior legal staff of Lee and Li attorneys-at-law (“Lee & Li”), Mr. Eddie Liu, of the shares owned by client SanDisk Corporation (“SanDisk”), an American company, held in custody by Lee and Li, Lee & Li and SanDisk pleaded to the Taipei District Court for mediation with Cathay United Bank Co., Ltd.(“Cathay United Bank”) on the grounds that proceeds from Liu’s unauthorized sale in the amount of NTD3,090,867,453 had been deposited in SanDisk’s account opened with the Cathay United Bank. The amount claimed by Lee & Li is NTD900,000,000 and the amount claimed by SanDisk is NTD3,090,867,453. However, following the pleading, Lee & Li and SanDisk applied to the Taipei District Court for postponement of the mediation proceeding and requested private negotiation for compensation with Cathay United Bank. Cathay United Bank, following the completion of an internal audit, believed it had presumably committed no negligence thus formally rejected such request in writing on July 27th,2007(but without ruling out the possibility of a suit initiated by Lee & Li and SanDisk against Cathay United Bank because of such rejection) This announcement is therefore made as above. 6.Countermeasures:Disclosing important information 7.Any other matters that need to be specified: The possibility of legal action initiated by Lee & Li and SanDisk against Cathay United Bank is not ruled out in view of the bank’s refusal to conduct negotiation. Cathay United Bank has engaged legal counsel for the necessary preparation.