THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. OUR HISTORY AND OPERATIONAL REFORM
OUR HISTORY
We were incorporated as a joint-stock commercial bank in the PRC on September 10, 1997 under the name of Shenyang City Cooperative Bank Co., Ltd. (瀋陽城市合作銀行股份有 限公司) through the consolidation of 33 urban credit cooperatives (including Shenyang Cooperative Bank (瀋陽合作銀行)) in Shenyang, Liaoning Province and capital injections by Shenyang Finance Bureau and the other 15 corporate investors. The shareholders of these 33 urban credit cooperatives (including 130 corporate shareholders and 3,502 individual shareholders) together with the 16 new investors (including Shenyang Finance Bureau) were our promoters and founding shareholders. Key milestones in our history are summarized below:
November 1996 PBOC approved our establishment.
September 1997 We were officially incorporated under the name of “Shenyang City Cooperative Bank Co., Ltd.” (瀋陽城市合作銀行股份有限 公司).
June 1998 We were renamed as “Shenyang Commercial Bank Co., Ltd.” (瀋陽市商業銀行股份有限公司).
May 1999 We issued our first debit card, the “Rose Debit Card” (玫瑰借記 卡), making us one of the first few city commercial banks to issue debit cards in China.
February 2003 We obtained approval to launch our bill acceptance business.
July 2005 We issued our first RMB credit card, the “Rose Credit Card” (玫 瑰信用卡), making the first city commercial bank in Northeast China to issue credit cards, and one of the first few city commercial banks to provide credit card services in China.
January 2007 We obtained approval to launch our foreign exchange business.
February 2007 We were renamed as “Shengjing Bank Co., Ltd.” (盛京銀行股份 有限公司).
May 2007 Our deposit balance exceeded RMB50 billion.
July 2007 We set up our Tianjin Branch, our first branch outside Liaoning Province, and located in municipality, which made us the first city commercial bank in Northeast China with cross-region operations.
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June 2009 We set up our Beijing Branch so as to operate in both municipalities in the Bohai Economic Rim.
December 2009 Our deposit balance exceeded RMB100 billion.
October 2010 We launched our new core business system to further integrate our financial system and settlement system, enabling our information system to better meet the needs of the three-level management comprising the head office, branches and sub- branches, and cross-region operations.
January 2011 We set up our Shanghai Branch, our first branch in Yangtze River Delta Economic Zone in the PRC.
November 2012 We launched our financial IC card system to better protect the funds of our Bank and our clients.
November 2012 Our deposit balance exceeded RMB200 billion.
July 2013 We established and promoted our financial service stations (金 融便民服務站) in Shenyang and other cities in Liaoning Province as well as in Beijing, Shanghai, Tianjin and Changchun.
Late 2013 Our branch network covered 10 of the 14 major cities in Liaoning Province.
2014 We effectively established a comprehensive electronic banking service system with the introduction of, among others, internet banking and mobile banking.
September 2014 We ranked first among city commercial banks with total assets of over RMB200 billion in the year of 2013 and were rewarded as the “Best City Commercial Bank” in the “Evaluation Report of the Competitiveness among PRC Commercial Banks of 2014” published by The Chinese Banker.
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Increase of Registered Capital
Upon incorporation, the registered capital of the Bank was RMB216,275,200, among which Shenyang Finance Bureau contributed RMB20,000,000 and the other 15 corporate investors contributed an aggregate of RMB8,873,000 in cash, respectively, and the shareholders of the 33 urban credit cooperatives contributed with net assets of the urban credit cooperatives. After several rounds of registered capital increase and introduction of new shareholders, our registered capital was increased to RMB4,396,005,200 as of the Latest Practicable Date. The major changes in our registered capital and our shareholders are summarized as follows:
1997-2000 Our registered capital was increased from RMB216,275,200 to RMB244,325,200 primarily due to the net results of (i) additional capital contributions by Shenyang Special Environmental Protection Equipment Manufacturing Co., Ltd. and Shenyang Finance Bureau; and (ii) deduction of a certain amount of share capital that was double counted into the share capital upon our establishment. The registration of such changes has been completed with Shenyang Administration Bureau for Industry and Commerce.
2006 We issued a total of 2,755,680,000 new shares to 16 new corporate shareholders (including Shenyang Hengxin, Huibao International and Zhongyou Tianbao), raising a total amount of RMB3,516,384,000 to replenish our capital and further expand our business scale. We completed the registration of such changes with Shenyang Administration Bureau for Industry and Commerce in June 2006. By then, our registered capital had been increased to RMB3,000,005,200.
2008 We issued 396,000,000 new shares to eight new corporate shareholders (including Xinhu Zhongbao), raising a total amount of RMB584,000,000 to replenish our capital and further expand our business scale. We completed the registration of such increase of registered capital with Shenyang Administration Bureau for Industry and Commerce in June 2008. By then, our registered capital had been increased to RMB3,396,005,200.
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2011 In order to replenish our capital and further expand our business scale, we issued 300,000,000 new shares to Founder Securities, raising a total amount of RMB1,500 million. We completed the registration of such change in registered capital with Shenyang Administration Bureau for Industry and Commerce in December 2011. By then, our registered capital had been increased to RMB3,696,005,200.
2013 to 2014 We issued 700,000,000 new shares to five new corporate shareholders, namely Beijing Zhaotai, Beijing Aojitong Investment (Group) Co., Ltd., Dalian Hesheng Holding Co., Ltd., Changchun Qianyuan Real Estate Development and Construction Co., Ltd. and Dalian Hydraulic Machinery Co., Ltd., raising a total amount of RMB3,850 million to replenish our capital and further expand our business scale. We completed the registration of such increase of registered capital with Shenyang Administration for Industry and Commerce in May 2014. By then, our registered capital had been increased to RMB4,396,005,200.
Disposal and Write-Off of Non-Performing Assets
In order to dispose of non-performing loans inherited historically, according to the arrangement made and approved by Shenyang Municipal People’s Government in relation to our Bank’s disposal of non-performing assets in June 2004, which was also approved by the CBRC, we disposed of non-performing loans of an aggregate principal amount of RMB2,000 million to Shenyang City Construction, an independent third party, for a consideration of RMB2,000 million. Our Bank also extended a loan to Shenyang City Construction for it to purchase such non-performing assets. According to the documents issued by Shenyang Municipal People’s Government regarding its continued support for the disposal of our Bank’s non-performing assets, on March 26, 2008, we entered into an agreement (the “Tripartite Agreement”) with Shenyang City Construction and Shenyang Hengxin, pursuant to which, among others, (i) we agreed to extend a loan in the amount of RMB1,723 million (such loan is classified as “Other Receivables” as the loan is interest-free) (the “Relevant Receivables”) to Shenyang City Construction for it to refinance the outstanding balance of the loan granted to it for its purchase of our Bank’s non-performing assets in 2004; (ii) Shenyang Hengxin agreed to provide guarantee for the repayment of the Relevant Receivables; and (iii) Shenyang Hengxin agreed that such non-performing assets would be transferred to it and it would repay the Relevant Receivables using the proceeds from future disposal of the Shares it held. As of the Latest Practicable Date, the outstanding balance of the Relevant Receivables was approximately RMB756 million.
After discussion among our Bank, Shenyang City Construction and Shenyang Hengxin regarding the repayment of the outstanding balance of the Relevant Receivables, on October 8, 2014, Shenyang Hengxin irrevocably undertook to us as follows: (1) Shenyang Hengxin will continue to perform its obligations under the Tripartite Agreement (including using the
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Issuance of Subordinated Bonds
In November 2008, following the receipt of approvals from the CBRC and the PBOC, we issued ten-year-term subordinated bonds with an aggregate principal amount of RMB1,200 million on the inter-bank bond market, which bear interest on an annual basis. The annual interest rate for the first five years is fixed at 5.50%, and if the bonds are not redeemed by the expiry of the first five-year period, the interest rate for the next five-year period will be increased by 2.50%. These bonds were redeemed in full in 2013.
In November 2011, in order to improve our capital adequacy ratio and optimize our capital structure, following the receipt of approvals from the CBRC and the PBOC, we issued ten-year-term subordinated bonds with an aggregate principal amount of RMB900 million on the inter-bank bond market with a fixed interest rate of 6.50% per annum payable on an annual basis. These bonds are redeemable in full or partially at our discretion at the end of the fifth year subject to the CBRC’s approval.
In May 2014, in order to further improve our capital adequacy ratio and optimize our capital structure, following the receipt of approvals from the CBRC and the PBOC, we issued ten-year-term Tier 2 capital bonds with an aggregate principal amount of RMB2,200 million on the inter-bank bond market with a fixed interest rate of 6.18% per annum payable on an annual basis. These bonds are redeemable in full or partially at the end of the fifth year subject to the CBRC’s approval.
APPLICATION FOR A SHARE LISTING
We submitted an application to the CSRC for the proposed listing of our A shares on the Shanghai Stock Exchange in September 2010 and the CSRC formally accepted the listing application for consideration in September 2010. We will submit an application to the CSRC to suspend our A-share listing application process before Listing. We decided to list our H Shares not because CSRC had found anything unfavorable with respect to our A-share listing application or our A-share listing application was rejected, but because of our Bank’s need to replenish its capital. In addition, unless otherwise specified in our Articles of Association, after the Listing of our H Shares, we will obtain approval of shareholders (including holders of our H Shares) in a general meeting if the Board considers it is appropriate to resume the application process with the CSRC for A-Share listing in the future.
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OUR SHAREHOLDING AND CORPORATE STRUCTURE
Shareholding Structure
As at the Latest Practicable Date, we had 148 corporate shareholders and 3,321 individual shareholders who in aggregate hold approximately 97.23% and 2.77% of our Shares, respectively. Shenyang Hengxin is our single largest shareholder, holding 10.92% of our Shares immediately prior to [REDACTED]. As of the Latest Practicable Date, there are six shareholders with individual shareholding of not less than 5% of our total issued Shares, holding in aggregate 45.71% of the share capital of our Bank. Our Directors confirm, after due and reasonable enquiries, that such six shareholders are independent from each other.
As at the Latest Practicable Date, we were unable to verify the shareholding of 33 corporate shareholders and 139 individual shareholders (including those whom we are unable to contact), holding in aggregate approximately 0.12% of our Shares. According to our PRC legal advisor, Tian Yuan Law Firm, the existence of such shareholders whom we are unable to verify their shareholding has no material adverse impact on the stability of our shareholding structure or our legitimate existence (including our Bank’s ability to carry out corporate actions such as holding shareholders’ general meetings and paying dividends).
Immediately before [REDACTED]
The following chart sets forth our shareholding structure as at the Latest Practicable Date and immediately prior to [REDACTED]:
Shenyang Huibao Xinhu Founder Beijing Zhongyou Other corporate Individual Hengxin(1) International(2) Zhongbao(3) Securities(4) Zhaotai(5) Tianbao(6) shareholders(7) shareholders(8)
10.92% 9.10% 6.82% 6.82% 6.82% 5.23% 51.52% 2.77%
Shengjing Bank Co., Ltd.(9)
20% 20% 20% 20% 30% 40%
Shenyang Shenyang Shenyang Shenyang Ningbo Shanghai Shenbei Fumin Xinmin Fumin Faku Fumin Liaozhong Jiangbei Fumin Baoshan Fumin Village Bank Village Bank Village Bank Fumin Village Rural Bank Rural Bank Co., Ltd.(10) Co., Ltd.(11) Co., Ltd.(12) Bank Co., Ltd.(13) Co., Ltd.(14) Co., Ltd.(15)
Notes:
(1) Shenyang Hengxin is wholly owned by Shenyang Industrial Investment Development Group Co., Ltd. (瀋陽產業投資發展集團有限公司), which is in turn wholly owned by Shenyang SASAC, is one of our state-owned shareholders and the single largest shareholder of our Bank. Shenyang Hengxin is principally engaged in, without limitation to, asset management, capital operations and industrial investments.
(2) Huibao International is one of our non-state-owned corporate shareholders and is wholly owned by Beijing Jiutai Group Co., Ltd. (北京九台集團有限公司), which is in turn owned as to 70% and 30% by two individuals, Li Yuguo (李玉國), one of our non-executive Directors, and Liao Jing (廖婧), respectively. Huibao International is principally engaged in, without limitation to, investment in and construction and management of properties, mines, agriculture, tourism, port and highway construction; development and sales of real properties; leasing of real properties.
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(3) Xinhu Zhongbao is one of our non-state-owned corporate shareholders and is listed on the Shanghai Stock Exchange (stock code: 600208). Xinhu Zhongbao is principally engaged in, without limitation to, industrial investments, groceries and investment management.
(4) Founder Securities is one of our non-state-owned corporate shareholders and is listed on the Shanghai Stock Exchange (stock code: 601901). Founder Securities is principally engaged in, but not limited to, securities, futures and financing business.
(5) Beijing Zhaotai is one of our non-state-owned corporate shareholders. It is owned as to 41.60% and 38.50% by Mu Qiru (穆麒茹) and Beijing Zhaotai Holding Co., Ltd. (北京兆泰控股有限公司), which is in turn owned as to 70% by Mu Qiru. Beijing Zhaotai is principally engaged in, without limitation to, investment, development and management of real properties.
(6) Zhongyou Tianbao is one of our non-state-owned corporate shareholders. It is owned as to 80%, 10% and 10% by three individuals, Liu Xinfa (劉新發), one of our non-executive Directors, Liu Xinlin (劉 新林) and Liu Xinchang (劉新昌). Zhongyou Tianbao is principally engaged in, without limitation to, wholesale and retail of metal materials, electrical and mechanical equipment, etc., import and export of various kinds of goods and technologies on proprietary or agency basis.
(7) The other 142 corporate shareholders in aggregate hold approximately 51.52% of our total issued Shares. The shareholding percentages of these corporate shareholders range from approximately 0.00000909% to 4.55%.
(8) The 3,321 individual shareholders in aggregate hold approximately 2.77% of our total issued Shares. The shareholding percentages of these individual shareholders range from approximately 0.000001296% to 0.011373962%.
(9) As of June 30, 2014, we had one head office and 143 branches and sub-branches.
(10) Shenyang Shenbei Fumin Village Bank Co., Ltd. (“Shenbei Fumin Village Bank”) was established on February 9, 2009. Its registered address is No. 1 Mingzhu Road, Huishan Economic Development Zone, Shenyang North New Area, Shenyang. Its registered capital is RMB150 million. The business scope of Shenbei Fumin Village Bank includes taking deposits from the public, extending short-term, medium-term and long-term loans; effecting domestic payment settlements; accepting and discounting instruments; engaging in inter-bank lending; acting as the issuance agent, the cashing agent or the underwriter of government bonds; collecting and making payment as agent; and engaging in other business as approved by the banking regulatory authorities.
As at the Latest Practicable Date, the Bank holds 20% of the equity interest in Shenbei Fumin Village Bank and is its largest shareholder, while Shenyang High-tech Venture Investment Co., Ltd. (瀋陽高新 創業投資有限公司), Shenyang Shenbei Xingchuang Investment Co., Ltd. (瀋陽瀋北興創投資有限公司), Shenyang Xinyou Communications Co., Ltd. (瀋陽新郵通信設備有限公司), Shenyang Longji Logistics Development Co., Ltd. (瀋陽龍吉物流發展有限公司), Shenyang Kaicheng Housing Development Co., Ltd. (瀋陽凱城房屋開發有限公司) and Shanghai Chenyu Investment Co., Ltd. (上海晨鈺投資有限公司) each holds 10% of the registered capital of Shenbei Fumin Village Bank and Shenyang Yeqiao Investment and Development Co., Ltd. (瀋陽業喬投資發展有限公司), Shenyang Puxing Poultry Group Co., Ltd. (瀋陽蒲興禽業集團有限公司), Shenyang Zhongyou Material Recycling Co., Ltd. (瀋陽中油物 資回收再生有限公司), Li Haixia (李海霞), Yin Hongyu (尹洪禹), Wang Zexin (王澤新) and Sun He (孫 赫) each holds 6.67%, 5%, 4.67%, 1%, 1%, 1% and 0.67% of the registered capital of Shenbei Fumin Village Bank, respectively. All the above-mentioned shareholders of Shenbei Fumin Village Bank are independent third parties of the Bank. In May 2014, we entered into a written concert party agreement with Shenyang High-tech Venture Investment Co., Ltd. (瀋陽高新創業投資有限公司), Shenyang Shenbei Xingchuang Investment Co., Ltd. (瀋陽瀋北興創投資有限公司), Shenyang Xinyou Communications Co., Ltd. (瀋陽新郵通信設備有限公司), Shenyang Kaicheng Housing Development Co., Ltd. (瀋陽凱城房屋開發有限公司), Shenyang Longji Logistics Development Co., Ltd. (瀋陽龍吉物 流發展有限公司), Shenyang Yeqiao Investment and Development Co., Ltd. (瀋陽業喬投資發展有限公 司) and Shenyang Zhongyou Material Recycling Co., Ltd. (瀋陽中油物資回收再生有限公司), which hold in aggregate 61.34% of the equity interest in Shenbei Fumin Village Bank, pursuant to which they confirmed that they have, since the effective date (i.e. June 28, 2012) of the articles of association of Shenbei Fumin Village Bank passed at its first extraordinary general meeting in 2012, voted, and undertook to continue to vote, in the same way as us in all major decision making involving the financial
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and operating policies of Shenbei Fumin Village Bank. Therefore, Shenbei Fumin Village Bank is accounted for as a subsidiary in our consolidated financial information as discussed in Note 21 of Appendix I starting from June 28, 2012. Our PRC legal advisor, Tian Yuan Law Firm, is of the opinion that such concert party agreement is legally binding, valid and enforceable.
(11) Shenyang Xinmin Fumin Village Bank Co., Ltd. (“Xinmin Fumin Village Bank”) was established on June 25, 2010. Its registered address is No. 60 Liaohe Avenue, Xinmin. Its registered capital is RMB30 million. The business scope of Xinmin Fumin Village Bank includes taking deposits from the public, extending short-term, medium-term and long-term loans; effecting domestic settlements; accepting and discounting instruments; engaging in inter-bank lending; engaging in bank debit card business; acting as the issuance agent, the cashing agent or the underwriting of government bond; collecting and making payment as agent and acting as insurance agent; and engaging in other business as approved by the banking regulatory authorities of the State Council.
As at the Latest Practicable Date, the Bank holds 20% of the equity interest in Xinmin Fumin Village Bank and is its largest shareholder, while Shenyang Future Realty & Property Development Co., Ltd. (瀋陽未來置業房產開發有限公司), Xinmin City State-owned Assets Operation Co., Ltd. (新民市國有資 產經營有限責任公司), Shenyang Oriental Art Museum (瀋陽東方美術館), Shenyang Baochen Trading Co., Ltd. (瀋陽寶辰商貿有限公司), and Shenyang Xuxingjin Investment Guarantee Co., Ltd. (瀋陽旭興 進投資擔保有限公司) each holds 10% of the registered capital of Xinmin Fumin Village Bank, and Wenzhou New Era Education Development Co., Ltd. (溫州新紀元教育發展有限公司), Shenyang Minghua Housing Development Co., Ltd. (瀋陽明華房屋開發有限公司), Zou Qingmei (鄒清梅), Zhang Haiyan (張海岩), Zhang Xingnan (張星南) and Ge Lin (葛林) each holds 5% of the registered capital of Xinmin Fumin Village Bank. All the above-mentioned shareholders of Xinmin Fumin Village Bank are independent third parties of the Bank. In May 2014, we entered into a written concert party agreement with Shenyang Future Realty & Property Development Co., Ltd. with (瀋陽未來置業房產開 發有限公司), Xinmin City State-owned Assets Operation Co., Ltd. (新民市國有資產經營有限責任公 司), Shenyang Xuxingjin Investment Guarantee Co., Ltd. (瀋陽旭興進投資擔保有限公司), Shenyang Minghua Housing Development Co., Ltd. (瀋陽明華房屋開發有限公司), Zou Qingmei (鄒清梅), Zhang Haiyan (張海岩), Zhang Xingnan (張星南) and Ge Lin (葛林), which hold in aggregate 55% of the equity interest in Xinmin Fumin Village Bank, pursuant to which they confirmed that they have, since the effective date (i.e. June 28, 2012) of the revised articles of association of Xinmin Fumin Village Bank passed at its third general meeting in 2012, voted, and undertook to continue to vote, in the same way as us in all major decision making involving the financial and operating policies of Xinmin Fumin Village Bank. Therefore, Xinmin Fumin Village Bank is accounted for as a subsidiary in our consolidated financial information, as discussed in Note 21 of Appendix I starting from June 28, 2012. Our PRC legal advisor, Tian Yuan Law Firm, is of the opinion that such concert party agreement is legally binding, valid and enforceable.
(12) Shenyang Faku Fumin Village Bank Co., Ltd. (“Faku Fumin Village Bank”) was established on October 26, 2010. Its registered address is Tuanjie Road, Faku Town, Faku County. Its registered capital is RMB30 million. The business scope of Faku Fumin Village Bank includes taking deposits from the public, extending short-term, medium-term and long-term loans; effecting domestic settlements; accepting and discounting instruments; engaging in inter-bank lending; engaging in bank debit card business; acting as the issuance agent, the cashing agent or the underwriting of government bond; collecting and making payment as agent and acting as insurance agent; and engaging in other business as approved by the banking regulatory authorities of the State Council.
As at the Latest Practicable Date, the Bank holds 20% of the equity interest in Faku Fumin Village Bank and is its largest shareholder, while Faku County Assets Operation Company (法庫縣資產經營有限公 司), Shenyang Jiashi Realty & Development Co., Ltd. (瀋陽嘉實置業發展有限公司), Shenyang Hunnan Realty & Development Co., Ltd. (瀋陽渾南置業發展有限公司), Shenyang Yutian Experimental High School (瀋陽市雨田實驗中學), Liaoning Aiger Investment Co., Ltd. (遼寧艾格爾投資有限公司), Shengyang AoDe Culture Media Co., Ltd. (瀋陽奧德文化傳播有限公司) each holds 10% of the registered capital of Faku Fumin Village Bank and Chen Yanhong (陳燕虹), Dong Tao (董濤), Chen Lulin (陳鹿林) and Gao Hongjing (高洪靜), each holds 5% of the registered capital of Faku Fumin Village Bank, respectively. All the above-mentioned shareholders of Faku Fumin Village Bank are independent third parties of the Bank. In May 2014, we entered into a written concert party agreement with Faku County Assets Operation Company (法庫縣資產經營有限公司), Shenyang Yutian Experimental High School (瀋陽市雨田實驗中學), Shengyang AoDe Culture Media Co., Ltd. (瀋陽奧德 文化傳播有限公司), Chen Yanhong (陳燕虹), Dong Tao (董濤), Chen Lulin (陳鹿林) and Gao Hongjing
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(高洪靜), which hold in aggregate 50% of the equity interest in Faku Fumin Village Bank, pursuant to which they confirmed that they have, since the effective date (i.e. June 28, 2012) of the revised articles of association of Faku Fumin Village Bank passed at its first extraordinary general meeting in 2012, voted, and undertook to continue to vote, in the same way as us in all major decision makings involving the financial and operating policies of Faku Fumin Village Bank. Therefore, Faku Fumin Village Bank is accounted for as a subsidiary in our consolidated financial information, as discussed in Note 21 of Appendix I starting from June 28, 2012. Our PRC legal advisor, Tian Yuan Law Firm, is of the opinion that such concert party agreement is legally binding, valid and enforceable.
(13) Shenyang Liaozhong Fumin Village Bank Co., Ltd. (“Liaozhong Fumin Village Bank”) was established on November 26, 2010. Its registered address is No. 140 Zhengfu Road, Liaozhong Town, Liaozhong County. Its registered capital is RMB30 million. Liaozhong Fumin Village Bank are permitted to engage in those business as approved by the CBRC pursuant to relevant laws, administrative regulations and other regulations, and those as listed in relevant approval documents.
As at the Latest Practicable Date, the Bank holds 20% of the equity interest in Liaozhong Fumin Village Bank and is its largest shareholder, while Shenyang Xiangrun Economic & Trade Co., Ltd. (瀋陽祥潤 經貿有限公司), Dalian Free Trade Zone Huangting PetroChemical Trading Co., Ltd. (大連保稅區皇廷 石化貿易有限公司), Shenyang Seashore Zhongqiang Investment Co., Ltd. (瀋陽近海中強投資有限公司) and Shenyang International Logistics Development Co., Ltd. (瀋陽市國際物流發展有限公司) each holds 10% of the registered capital of Liaozhong Fumin Village Bank and Tu Zhenkai (涂振凱), Wang Ying (王影), Wang Xiaoming (王曉明), Wang Ye (王野), Shen Siwei (沈思偉), Li Changhong (李長虹), Chen Weitian (陳煒天) and Wang Deku (王德庫) each holds 5% of the registered capital of Liaozhong Fumin Village Bank, respectively. All the above-mentioned shareholders of Liaozhong Fumin Village Bank are independent third parties of the Bank. In May 2014, we entered into a written concert party agreement with Shenyang Xiangrun Economic & Trade Co., Ltd. (瀋陽祥潤經貿有限公司), Dalian Free Trade Zone Huangting PetroChemical Trading Co., Ltd. (大連保稅區皇廷石化貿易有限公司), Shenyang International Logistics Development Co., Ltd. (瀋陽市國際物流發展有限公司) Tu Zhenkai (涂振凱), Wang Ying (王影), Wang Xiaoming (王曉明), Wang Ye (王野), Shen Siwei (沈思偉), Li Changhong (李 長虹), Chen Weitian (陳煒天) and Wang Deku (王德庫) which hold in aggregate 70% of the equity interest in Liaozhong Fumin Village Bank, pursuant to which they confirmed that they have, since the effective date (i.e. June 28, 2012) of the revised articles of association of Liaozhong Fumin Village Bank passed at its third general meeting in 2012, voted, and undertook to continue to vote in the same way as us in all major decision makings involving the financial and operating policies of Liaozhong Fumin Village Bank. Therefore, Liaozhong Fumin Village Bank is accounted for as a subsidiary in our consolidated financial information as discussed in Note 21 of Appendix I starting from June 28, 2012. Our PRC legal advisor, Tian Yuan Law Firm, is of the opinion that such concert party agreement is legally binding, valid and enforceable.
(14) Ningbo Jiangbei Fumin Rural Bank Co., Ltd. (“Jiangbei Fumin Rural Bank”) was established on August 17, 2011. Its registered address is No. 18 Minquan Road, Cicheng Town, Jiangbei District, Ningbo. It registered capital is RMB100 million. The business scope of Jiangbei Fumin Rural Bank includes taking deposits from the public, extending short-term, medium-term and long-term loans; effecting domestic settlements; accepting and discounting instruments; engaging in inter-bank lending; engaging in the bank card business (debit cards); acting as the issuance agent, the cashing agent or the underwriter of government bonds; collecting and making payments as agent.
As at the Latest Practicable Date, the Bank holds 30% of the equity interest in Jiangbei Fumin Rural Bank and is its largest shareholder, while Shanghai Kaixin Construction Engineering Co., Ltd. (上海凱 鑫建設工程有限公司), Ningbo Xinya Construction Co., Ltd. (寧波新亞建設有限公司), Zhejiang Jihui Industrial Co.,Ltd. (浙江集匯實業有限公司), Zhejiang Zhetian Communications Engineering Co., Ltd. (浙江浙天通信工程有限公司) and Ningbo Jintian Cooper (Group) Co., Ltd. (寧波金田銅業(集團)股份有 限公司) each holds 10% of the registered capital of Jiangbei Fumin Rural Bank, and Shenyang Yeqiao Investment and Development Co., Ltd. (瀋陽業喬投資發展有限公司), Ningbo Youli Investment Co., Ltd. (寧波友利投資有限公司) and Ningbo Fenghua Shipping Co., Ltd. (寧波市豐華船務有限公司) each holds 8%, 6% and 6% of the registered capital of Jiangbei Fumin Rural Bank, respectively. All the above-mentioned shareholders of Jiangbei Fumin Rural Bank are independent third parties of the Bank. In May 2014, we entered into a written concert party agreement with Shanghai Kaixin Construction Engineering Co., Ltd. (上海凱鑫建設工程有限公司), Zhejiang Jihui Industrial Co., Ltd. (浙江集匯實業 有限公司), Zhejiang Zhetian Communications Engineering Co., Ltd. (浙江浙天通信工程有限公司), Shenyang Yeqiao Investment and Development Co., Ltd. (瀋陽業喬投資發展有限公司), Ningbo Youli
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Investment Co., Ltd. (寧波友利投資有限公司) and Ningbo Fenghua Shipping Co., Ltd. (寧波市豐華船 務有限公司), which hold in aggregate 50% of the equity interest in Jiangbei Fumin Rural Bank, pursuant to which they confirmed that they have, since the effective date (i.e. June 28, 2012) of the revised articles of association of Jiangbei Fumin Rural Bank passed at its first extraordinary general meeting in 2012, voted, and undertook to continue to vote, in the same way as us in all major decision makings involving the financial and operating policies of Jiangbei Fumin Rural Bank. Therefore, Jiangbei Fumin Rural Bank is accounted for as a subsidiary in our consolidated financial information as discussed in Note 21 of Appendix I starting from June 28, 2012. Our PRC legal advisor, Tian Yuan Law Firm, is of the opinion that such concert party agreement is legally binding, valid and enforceable.
(15) Shanghai Baoshan Fumin Rural Bank Co., Ltd. (“Baoshan Fumin Rural Bank”) was established on September 9, 2011. Its registered address is No. 458, Baolin Road, Baoshan District, Shanghai. Its registered capital is RMB150 million. The business scope of Baoshan Fumin Rural Bank includes taking deposits from the public, extending short-term, medium-term and long-term loans; effecting domestic settlements; accepting and discounting instruments; engaging in inter-bank lending; engaging in bank card business; acting as the issuance agent, the cashing agent or the underwriting of government bond; collecting and making payment as agent and acting as insurance agent; and engaging in other business as approved by the banking regulatory authorities.
As at the Latest Practicable Date, the Bank holds 40% of the equity interest in Baoshan Fumin Rural Bank and is its largest shareholder, while Shenyang Future Realty & Property Development Co., Ltd. (瀋陽未來置業房產開發有限公司), Shanghai Changxin Group Co., Ltd. (上海昌鑫(集團)有限公司), Shanghai Jinrui Construction Group Co., Ltd. (上海金瑞建設集團有限公司), Shanghai Third Harbor Benteng Construction and Engineering Co., Ltd. (上海三航奔騰建設工程有限公司), Shanghai Baiying Iron & Steel Group Co., Ltd. (上海百營鋼鐵集團有限公司), Shanghai Huanbei Real Property Co., Ltd. (上海環北房地產有限公司), Dalian Zunyuan Investment Co., Ltd. (大連尊遠投資有限公司) and Han Yong (韓雍) each holds 10%, 10%, 10%, 8%, 7%, 7%, 5.33% and 2.67% of the registered capital of Baoshan Fumin Rural Bank. All the above-mentioned shareholders of Baoshan Fumin Rural Bank are independent third parties of the Bank. In May 2014, we entered into a written concert party agreement with Shenyang Future Realty & Property Development Co., Ltd. (瀋陽未來置業房產開發有限公司), Shanghai Changxin Group Co., Ltd. (上海昌鑫(集團)有限公司), Shanghai Jinrui Construction Group Co., Ltd. (上海金瑞建設集團有限公司), and Dalian Zunyuan Investment Co., Ltd. (大連尊遠投資有限 公司), which hold in aggregate 35.33% of the equity interest in Baoshan Fumin Rural Bank, pursuant to which they confirmed that they have, since the effective date (i.e. June 28, 2012) of the revised articles of association of Baoshan Fumin Rural Bank passed at its second extraordinary general meeting in 2012, voted, and undertook to continue to vote, in the same way as us in all major decision makings involving the financial and operating policies of Baoshan Fumin Rural Bank. Therefore, Baoshan Fumin Rural Bank is accounted for as a subsidiary in our consolidated financial information as discussed in Note 21 of Appendix I starting from June 28, 2012. Our PRC legal advisor, Tian Yuan Law Firm, is of the opinion that such concert party agreement is legally binding, valid and enforceable.
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Immediately after the Completion of [REDACTED]
The following chart sets forth our shareholding structure immediately following the completion of [REDACTED], assuming [REDACTED] is not exercised:
Shenyang Huibao Xinhu Founder Beijing Zhongyou Other corporate Individual Other public shareholders Hengxin International Zhongbao Securities Zhaotai Tianbao shareholders shareholders NSSF of H Shares
[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]
Shengjing Bank Co., Ltd.
20% 20% 20% 20% 30% 40% Shenyang Shenbei Shenyang Xinmin Shenyang Faku Shenyang Liaozhong Ningbo Jiangbei Shanghai Baoshan Fumin Village Fumin Village Fumin Village Fumin Village Fumin Rural Fumin Rural Bank Co., Ltd. Bank Co., Ltd. Bank Co., Ltd. Bank Co., Ltd. Bank Co., Ltd. Bank Co., Ltd.
ORGANIZATIONAL STRUCTURE AND OPERATIONAL REFORM
The following chart sets forth the principal organizational and management structure of our Bank as at the Latest Practicable Date:
Shareholders’ Strategic Development Committee Nomination Committee General Meeting Beijing Branch Nomination and Remuneration Committee Board of Board of Supervision Committee Shanghai Branch Risk Control Committee Directors Supervisors Tianjin Branch Audit Committee Office of Supervisory Board Related Party Transactions Control Changchun Branch Committee
Board Office Dalian Branch Head Office Branch Assets and Liabilities Anshan Branch Management Committee 97 Sub-branches Senior Shenyang Branch Benxi Branch Expert Review Committee Risk Management Management Committee Yingkou Branch Other Branches
Credit Approval Committee Panjin Branch
Head Office Huludao Branch Policy and Review Committee for Risks of Departments Asset Investment, Operation and Management Chaoyang Branch Information Technology Management Committee Fushun Branch
Jinzhou Branch Center Department Department Labor’s Union Research Center Party Committee President’s Office Audit Department Legal Department Consumer Interest Supervisory Office Risk Control Center Risk Security Department International Business Protection Department E-Banking DepartmentE-Banking Development Strategies Compliance Department Party Committee Affairs Information Technology Management Department Management Department Youth League Committee Planning and Accounting Retail Banking Department Banking Retail Financial Market Operation Financial Market Wealth Management General Human Resources Department Corporate Banking Department Banking Corporate Investment Banking Department Banking Investment
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Corporate Governance Structure
We have established and further developed a corporate governance structure comprising shareholders’ general meeting, the Board, the Board of Supervisors and the senior management.
Our Board is accountable to our shareholders’ general meeting and is responsible for, among others, determining our business and development strategy, risk management strategy, operational plan and appointment of our senior management. Our Board delegates certain responsibilities to dedicated board committees, including an audit committee, a strategic development committee, a nomination and remuneration committee, a risk control committee and a related party transactions control committee. Each committee reports to our Board. See “Directors, Supervisors and Senior Management – Committees under the Board of Directors” for the functions of each committee.
The Board of Supervisors is accountable to our shareholders’ general meeting and is responsible for supervising the performance of the duties by the Board and the senior management as well as our finance, risk management and internal control. The Board of Supervisors has established a nomination committee and a supervision committee and each committee reports to the Board of Supervisors.
The senior management has executive powers conferred onto them by our Board to manage the day-to-day operations of our Bank. The president of our Bank is empowered to be primarily responsible for carrying out the decisions made by our Board and reports to our Board. We have also appointed vice presidents and other senior management staff (including chief risk officer, chief financial officer and chief information officer) to work with the president in performing their management responsibilities. We have established an assets and liabilities management committee, a risk management committee, a credit approval committee, a policy and review committee for risks of asset investment, operation and management and an information technology management committee under the senior management.
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OPERATIONAL REFORM
Risk Management and Internal Control
We are committed to the enhancement of our risk management structure and systems as well as to improving our internal control system. A summary of the key measures we have implemented in relation to our risk management and internal control reform is set forth below:
2006 We established our compliance department which is responsible for the management of our compliance risk.
We introduced an expert committee poll system for major and complex loans to further enhance the independence of credit review.
2008 We introduced the risk accountability system, strengthened the examination of delayed risks and deferred the payment of corresponding performance based compensation.
2009 We established the risk control department which is responsible for monitoring, inspecting and preventing risks associated with the day-to-day operation of our Bank.
2012 We established the risk control center and created the position of chief risk officer who is responsible for the overall risk management of our Bank.
We further strengthened our three-tier compliance risk management structure at our headquarters, branches and sub- branches.
2014 We set up the legal department, which is responsible for the legal risks of our Bank.
Please see “Risk Management” for more information about our risk management framework.
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Information Technology
We have been carrying out information technology infrastructure construction and development as well as system upgrades and optimization on an ongoing basis so as to support the growth of our business. A summary of the key measures we have implemented in relation to our information technology management and operational reform is set forth below:
2009 We established our information technology management committee to strengthen our decision-making and implementation in relation to information technology matters.
2010 We completed upgrading our core business system and credit management system to enable our information system to better fit our three-tier risk management compliance framework (consisting of our headquarters, branches and sub-branches) and cross-region operations.
We established our same-city disaster recovery center in Shenyang to ensure the continuity of our business in the event of disasters.
We launched an internal audit system for the application data center operation and maintenance to enhance the access right of the operating and maintenance staffs and internal audits.
2011 We launched our internet banking system, expanded our business channels and improved the efficiency of access to our services by our clients.
2012 We launched our financial IC card system to better protect the funds of our Bank and our clients.
2013 We established our cross-city disaster recovery centers in Yingkou to further ensure the continuity of our business in the event of disasters.
We launched multiple risk management models and systems to enhance our ability to quantify risks.
We launched mobile banking service to continue improving the efficiency of access to our services by our clients.
2014 We plan to launch our television banking service within the year to achieve full coverage of the electronic banking system.
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Human Resources
We attach importance to human resources and implement comprehensive employee trainings. A summary of the key measures we have implemented in relation to our employee training and development system is set forth below:
• We have established a three-tier (headquarters, branches and sub-branches) training management system, whereby the headquarters holds first-tier and demonstrative training, which in turn drives the second and third tier training to be conducted at branch and sub-branch levels respectively, so as to broaden the scale and enhance the quality of training;
• We have customized and conducted training activities based on employees’ positions and region locations in order to enhance the overall quality of our employees;
• We have raised qualification requirements for specific positions through qualification examinations and training sessions, including: implementation of a qualification accreditation system since 1999, which system was further optimized in 2005; and ongoing continuous on-job training and education programs. As of the Latest Practicable Date, more than 3,200 employees have obtained relevant professional qualifications;
• We have composed our own training manuals on 31 topics, including credit business, retail business, investment banking business, foreign exchange business, risk management, audit and security, so as to enhance the overall quality of our employees and to promote their career development;
• Since its establishment in 1998, our training center has been responsible for the employee training, position qualification accreditation and professional skill appraisal management throughout our Bank, enabling the employee training to meet the needs of our operations and development through planning management and demonstrative training and providing effective support for our sustainable and rapid development and cultivation of appropriate talents;
• We have established a professional skill appraisal system in 2008 covering all branches, departments and positions involved in the operation and management of our Bank as well as all aspects of professional skills. Through professional skill appraisal, we encouraged all our employees to improve their knowledge and skills, to effectively make use of their professional advantages, to strengthen the ability of continued employment and increase the value of our human resources; and
• We attach great importance to the selection, recruitment and appraisal of various talents with a particular focus on cultivation and introduction of professional talents. To enhance the professional capabilities of our employees and expand the platform for career development of our employees, we have set up professional positions, adopted the enterprise-oriented and market-oriented mechanism of talent selection and recruitment, formulated reward and incentive scheme for professional talent, strictly carried out performance appraisal management and standardized the recruitment and selection process for professional talent.
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