Our History and Operational Reform
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
HISTORY
On November 16, 1996, the Bank was established as a joint-stock commercial bank in the PRC S342(1)(a)(iv) App1A-5 under the name of City United Bank Co., Ltd. of Zhengzhou (鄭州城市合作銀行股份有限公司) after App1A-6 App1A-8(1) being approved by PBoC. The Bank was promoted and established jointly by the shareholders of 47 R19A.42(57) 3rd Sch(29) urban credit cooperatives and the sales department of one joint urban credit cooperative (including 313 R8.02 corporate shareholders and 9,062 individual shareholders) together with the Zhengzhou Finance Bureau and 14 new investors. At the time of our establishment, our registered capital was RMB452,759,882. Key milestones in the Bank’s history are as follows.
July 1996 PBoC approved the establishment of the Bank.
August 1996 PBoC approved the Bank to commence business.
November 1996 The Bank was registered and officially incorporated under the name of City United Bank Co., Ltd. of Zhengzhou (鄭州城市合作銀行股份有限公 司).
December 2000 The Bank was renamed as Zhengzhou Commercial Bank Co., Ltd. (鄭州 市商業銀行股份有限公司).
April 2009 The Bank established the small enterprises financing department which is responsible for independent accounting and independent assessment for the small enterprises loan business.
October 2009 The Bank was renamed as Bank of Zhengzhou Co., Ltd. (鄭州銀行股份 有限公司) with the approval from CBRC.
December 2009 Zhongmu Zhengyin County Bank Co., Ltd. (中牟鄭銀村鎮銀行股份有限 公司) officially commenced operation with the Bank as the chief promoter.
August 2010 The Nanyang branch, the Bank’s first provincial branch office, was established, marking a new stage of our inter-regional development.
December 2011 The Zhengguang Road sub-branch, the Bank’s first sub-branch designated to serving small enterprises, was established, marking the first solid step we have taken towards small enterprises loans operation.
The Bank completed capital increase by issuing 2,508,000,000 new Shares at the price of RMB2.72 per Share and raised RMB6,822 million.
June 2013 The Bank introduced five new services for domestic trade finance including letters of credit for domestic trade, domestic factoring, commercial acceptance bills, advance payment financing and order financing.
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OUR HISTORY AND OPERATIONAL REFORM
July 2013 The Bank was qualified to commence foreign exchange business, including deposits, loans, remittance and exchanges of foreign currencies.
August 2013 The Bank was approved to establish the post-doctoral research institute.
June 2014 The Bank’s provision of cross-border Renminbi settlement services was filed with PBoC Zhengzhou Central Sub-branch.
The Bank was qualified to commence credit card business.
The Bank was among the Top 500 World Banks in terms of the size of total assets and tier-one capital according to The Banker.
July 2014 The Bank became a primary member bank of the self-regulated interest rate pricing association (利率定價自律機制基礎成員行).
July 2015 The Bank was qualified to issue large-amount certificates of deposit.
Change in Registered Capital App1A-7(6)
At the time of our establishment, our registered capital was RMB452,759,882, among which, the Zhengzhou Finance Bureau and 14 corporate investors contributed RMB102,000,000 and RMB96,000,000, respectively, in cash and the shareholders of 47 urban credit cooperatives and the sales department of one joint urban credit cooperative contributed RMB254,759,882 in the form of appraised and discounted net assets of such urban credit cooperatives. After several rounds of changes in the registered capital and introduction of new Shareholders, our registered capital as of the Latest Practicable Date is RMB3,941,931,900. The major changes in our registered capital and Shareholders are summarized as follows.
From In accordance with the requirements of the provincial and municipal establishment to governments to eliminate risks of the Bank, the Bank offset the equity interest 1999 of Shareholders in the amount of RMB70,515,364. Hence, the paid-up capital of the Bank was RMB382,244,518 prior to the capital increase in 1999.
1999 to 2000 In accordance with the requirements of the provincial and municipal governments to eliminate risk of the Bank, our registered capital was increased from RMB382,244,518 to RMB1,983,284,518 by issuing 1,601,040,000 Shares, among which, (i) 800,000,000 Shares were subscribed by the Zhengzhou People’s Government in cash in the amount of RMB800,000,000; and (ii) 801,040,000 Shares were subscribed by entities and enterprises by converting their deposits with the Bank totalling RMB801,040,000. Registration of the aforementioned changes was completed with the Henan Administration for Industry and Commerce.
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OUR HISTORY AND OPERATIONAL REFORM
2002 The registered capital of the Bank increased from RMB1,983,284,518 to RMB1,998,217,282, among which, (i) the provincial and municipal finance bureaus injected registered capital in the amount of RMB60,192,764 by converting business tax collected from the Bank; (ii) RMB600,000 invested in the sub-operating office of a sub-branch by Henan Hezhong Property Management Co., Ltd. was consolidated into the capital account of the Bank; and (iii) reduction of RMB45,860,000 in our registered capital as a result of eight Shareholders withdrawing their shareholding in the Bank in an aggregate amount of RMB45,860,000. These eight Shareholders, who were originally creditors of the Bank, include the General Communication Development Corporation under the Zhengzhou Telecommunications Bureau, Labor Service Company under the Zhengzhou Telecommunications Bureau, Fund Settlement and Dispatching Center of the Yellow River Conservancy Commission, Henan Postal and Telecommunications Employees and Technology Association, Henan Province Postal Committee of China Postal and Telecommunications Labor Union, Henan Committee of China Postal and Telecommunications Labor Union, Zhengzhou Urban Construction, Removal and Settlement Company and Henan Securities Company. Registration of the aforementioned changes was completed with the Henan Administration for Industry and Commerce.
2006 The registered capital of the Bank reduced from RMB1,998,217,282 to RMB763,931,900. In accordance with the proposal approved by the Henan Government, the Bank reduced the paid-up capital of nine corporate Shareholders by RMB1,202,846,240 and offset the paid-up capital of 33 corporate Shareholders and eight individual Shareholders by RMB31,439,142, therefore reducing the registered capital of the Bank by RMB1,234,285,382 to offset certain historical loss. Registration of the aforementioned changes was completed with the Henan Administration for Industry and Commerce.
2006 to 2008 The registered capital of the Bank increased from RMB763,931,900 to RMB963,931,900 by issuing 200,000,000 Shares which was subscribed by the Zhengzhou Finance Bureau in cash in the amount of RMB200,000,000. Registration of the aforementioned change was completed with the Henan Administration for Industry and Commerce.
2008 to 2009 The registered capital of the Bank increased from RMB963,931,900 to RMB1,133,931,900 by issuing 170,000,000 Shares, among which Bridge Trust Co., Ltd., Zhengzhou Gas Group Co., Ltd. and Zhongyuan Environmental Protection Co., Ltd. subscribed for 60,000,000 Shares, 60,000,000 Shares and 50,000,000 Shares at RMB1.253 per Share, respectively. Among the subscription price, RMB1.00 per Share was taken as registered capital, and the remainder was used for writing off historical risk assets.
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OUR HISTORY AND OPERATIONAL REFORM
The registered capital of the Bank increased from RMB1,133,931,900 to RMB1,433,931,900 by issuing 300,000,000 Shares, among which, each of the six corporate Shareholders, namely, Zhengzhou Urban Road Network Construction Management Co., Ltd., Zhengzhou Municipal Facility Maintenance and Construction Co., Ltd., Zhengzhou Municipal Construction Engineering General Corporation, Zhengzhou Sewage Purification Co., Ltd., Zhengzhou Land Reserve Center and Zhengzhou Environmental Services Co., Ltd. paid RMB50,000,000 in cash to subscribe for 50,000,000 Shares.
Registration of the aforementioned changes was completed with the Henan Administration for Industry and Commerce.
2011 to 2012 The registered capital of the Bank increased from RMB1,433,931,900 to RMB3,941,931,900 by issuing 2,508,000,000 Shares which were subscribed for by 62 corporate Shareholders (including 58 new Shareholders and four original Shareholders), including Zhengzhou Investment Holdings Limited, Yutai International (Henan) Real Estate Development Co., Ltd., Henan Xingye Real Estate Development Co., Ltd., Henan Chendong Industrial Real Estate Development Co., Ltd. and Zhongyuan Trust Co., Ltd. at RMB2.72 per Share. Among the subscription price, RMB1.00 per Share was taken as registered capital, and the remainder was used for disposal of replacement assets. Registration of the aforementioned changes was completed with the Henan Administration for Industry and Commerce.
Issuance of Financial Bonds 3rd Sch(25)
In May 2013, the Bank issued financial bonds with an aggregate principal amount of RMB5.0 billion on the national interbank bond market for promoting our small and micro enterprises loan business. The Bank issued two types of bonds, 3-year-term bonds with a fixed interest rate of 4.58% and 5-year-term bonds with a fixed interest rate of 4.80%. These two types of bonds bear interest on an annual basis and early redemption is not permitted.
Issuance of Subordinate Bonds
In December 2009, in order to replenish our capital and improve capital adequacy ratio of the Bank to enhance its operational and anti-risk capabilities for supporting sustainable and steady development of businesses, the Bank issued 10-year-term subordinate bonds with an aggregate principal amount of RMB690 million which bear single interest on an annual basis with a fixed interest rate of 6.50% on the national interbank bond market. These bonds are redeemable in full or partially at the end of the fifth year subject to CBRC’s approval. If these bonds were not redeemed at the end of the fifth year, the interest rate shall increase by 300 basis points from the sixth year. These bonds were fully redeemed in December 2014.
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OUR HISTORY AND OPERATIONAL REFORM
Issuance of Tier-two Capital Bonds
In December 2014, in order to replenish our tier-two capital, the Bank issued 10-year-term tier-two capital bonds with an aggregate principal amount of RMB2.0 billion on the national interbank bond market, which bear simple interest on an annual basis with a fixed interest rate of 5.73%. These bonds are redeemable in full or partially at the end of the fifth year subject to CBRC’s approval.
OUR SHAREHOLDING AND CORPORATE STRUCTURE
Shareholding structure
As of the Latest Practicable Date, the Bank had 269 corporate Shareholders and 3,357 individual Shareholders holding in aggregate approximately 98.53% and 1.47% of our Shares, respectively. As of the Latest Practicable Date, there are eight Shareholders that hold more than 5% of our total issued Shares, namely, Zhengzhou Finance Bureau, Zhengzhou Development & Investment Group Co., Ltd., Yutai International (Henan) Real Estate Development Co., Ltd., Henan Xingye Real Estate Development Co., Ltd., Zhengzhou Investment Holdings Co., Ltd., Henan Chendong Industry Co., Ltd., Zhongyuan Trust Co., Ltd. and Henan Guoyuan Trade Co., Ltd., which hold approximately 19.37%, 5.65%, 6.65%, 6.34%, 5.96%, 5.73%, 5.20% and 5.05% of the Shares of our Bank, respectively. In particular, Zhengzhou Finance Bureau holds our Shares through companies directly or indirectly owned by it.
As of the Latest Practicable Date, we were unable to verify the shareholdings of 145 corporate Shareholders and 395 individual Shareholders (including those whom we are unable to contact), holding in aggregate approximately 0.73% of our Shares. The existence of such Shareholders whose shareholding we are unable to verify has no material adverse impact on our shareholding structure, corporate governance and business operations.
Immediately before the [REDACTED]
The following chart sets forth our shareholding structure as of the Latest Practicable Date and immediately prior to the [REDACTED].
Henan Xingye Real Zhengzhou Henan Chendong Henan Guoyuan Individual (1) Estate Development (5) (7) (9) Finance Bureau Industry Co., Ltd. Trade Co., Ltd. Shareholders Co., Ltd.(3)
Yutai International Zhengzhou (Henan) Real Estate Zhongyuan Trust Other corporate Investment (6) (8) Development (4) Co., Ltd. Shareholders Holdings Co., Ltd. Co., Ltd.2
19.37% 6.65% 6.34% 5.96% 5.73% 5.20% 5.05% 44.23% 1.47%
Our Bank(11)
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OUR HISTORY AND OPERATIONAL REFORM
(1) Zhengzhou Finance Bureau is our single largest Shareholder directly holding 12.45% of our Shares. Zhengzhou Finance Bureau also holds 3.44%, 1.27%, 2.16% and 0.05% of our equity interest through Zhengzhou Development & Investment Group Co., Ltd. (鄭州發展投資集團有限公司), Zhengzhou City Sanitation & Cleaning Co., Ltd. (鄭州市環衛清潔有限公司), Zhengzhou City Sewage Purification Co., Ltd. (鄭州市污水淨化有限公司) and Zhengzhou Running Water Investment Holdings Co., Ltd. (鄭州自來水投資控股有限公司), respectively, each of which is directly or indirectly wholly-owned by Zhengzhou Finance Bureau.
(2) Yutai International (Henan) Real Estate Development Co., Ltd. is a wholly-owned subsidiary of Henan Yutai Investment & Development Co., Ltd., which in turn is owned by XU Jianxin, our non-executive Director, as to 80% of its shares. Yutai International (Henan) Real Estate Development Co., Ltd. is principally engaged in, including but not limited to, development and sale of real estates.
(3) Henan Xingye Real Estate Development Co., Ltd. is owned by Henan Zensun Enterprise Development Co., Ltd., as to 97.8% of its shares. Henan Zensun Enterprise Development Co., Ltd. is in turn owned by ZHANG Huiqi, as to 90% of its shares. Henan Xingye Real Estate Development Co., Ltd. is principally engaged in, including but not limited to, development and operation of real estate (with certificate), sale of building materials and lease of buildings.
(4) Zhengzhou Investment Holdings Co., Ltd. is wholly-owned by State-owned Assets Supervision and Administration Commission of Zhengzhou. Zhengzhou Investment Holdings Co., Ltd. is principally engaged in, including but not limited to, investment and operation of state-owned assets, development and sale of real estates and lease of buildings (with valid qualification certificates).
(5) Henan Chendong Industry Co., Ltd. is owned by each of Du Liling and WANG Meilan as to 50% of its shares. Henan Chendong Industry Co., Ltd. is principally engaged in, including but not limited to, sale of building materials, chemical materials (excluding inflammable and explosive hazardous chemicals), arts and crafts, furniture, hardware and electrical equipment, textiles, general merchandise, computer software and hardware, sundries, and electrical equipment (excluding motor vehicles) and apparel.
(6) Zhongyuan Trust Co., Ltd. is owned by Henan Investment Group Co., Ltd. and Henan Zhongyuan Express Co., Ltd. as to 48.42% and 33.28%, respectively. Henan Investment Group Co., Ltd. is wholly-owned by Henan Province Development and Reform Commission. Henan Zhongyuan Express Co., Ltd. is owned by Henan Transport Investment Group Co., Ltd. as to 45.09% of its shares, which is in turn wholly-owned by the People’s Government of Henan Province. Zhongyuan Trust Co., Ltd. is principally engaged in, including but not limited to, fund trust, chattel trust, real estate trust, negotiable securities trust, trust of other properties or property rights, engagement in the business of investment funds in the capacity of a sponsor of investment funds or fund management companies, and the businesses involving enterprise assets restructuring, merger and acquisition, project financing, corporate wealth management, financial consulting, and operation of the securities underwriting business approved by the relevant departments of the State Council.
(7) Henan Guoyuan Trade Co., Ltd. is owned by ZHU Zhihui, one of our Supervisors, and his spouse, WANG Linhui as to 90% and 10%, respectively. Henan Guoyuan Trade Co., Ltd. is principally engaged in, including but not limited to, sale of building and decoration materials, machinery and electronic products (excluding motor vehicles), electric hardware, general merchandise, electronics, instrument and apparatus, ceramics products, office supplies, sporting goods, engineering machinery equipment and accessories, computers and accessories, communication and network equipment, and lease of buildings.
(8) The other 258 corporate Shareholders in aggregate hold approximately 44.23% of our total issued Shares. The highest shareholding of these corporate Shareholders is not more than 3.17%.
(9) The 3,357 individual Shareholders in aggregate hold approximately 1.47% of our total issued Shares. The highest shareholding of these individual Shareholders is not more than 0.025%.
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OUR HISTORY AND OPERATIONAL REFORM
(10) As of the Latest Practicable Date, 1,723,263,980 Shares (representing 43.72% of our total issued Shares) held in aggregate by 34 Shareholders were pledged and 303,555,000 Shares (representing 7.70% of our total issued Shares) held in aggregate by nine Shareholders were frozen by several judicial bodies.
(11) We intend to establish a financial leasing company in Zhengzhou to carry out financial leasing business with two App1A-29(1) App1A-29(2) independent third parties, the registered capital of which is proposed to be owned by us as to 51%. We will apply to CBRC for approval to set up the financial leasing company. We will commence the preparatory work for the setting up of the company after the formal approval is obtained.
Immediately after the Completion of the [REDACTED]
The following chart sets forth our shareholding structure immediately following the completion R8.09(1) of the [REDACTED], assuming the [REDACTED] Option is not exercised and no change in shareholding by each of the Shareholders listed below after the Latest Practicable Date.
[REDACTED]
— 160 — Organizational Structure and Operational Reform SECTION THE WITH CONJUNCTION AND IN DOCUMENT. CHANGE THIS READ TO OF SUBJECT BE COVER AND THE MUST ON INCOMPLETE “WARNING” INFORMATION FORM, HEADED DRAFT THE IN THAT IS DOCUMENT THIS
The following chart sets forth the principal organizational and management structure of our Bank as of the Latest Practicable Date.
Nomination Committee Shareholders’ General Meeting Risk Management Committee Remuneration and Assessment Committee Nomination Committee REFORM OPERATIONAL AND HISTORY OUR Audit Committee
Related Party Transactions Control Committee Board of Directors Board of Supervisors Supervisory Committee Strategic Development Committee Office of Supervisory General Office of the Board Board Risk Management Office of the Board Internal Audit Office of the Board 6 — 161 — Remuneration and Evaluation Office of the Board Strategic Development Department of the Board
Financial and Management Senior Management Committee
Risk Management Committee
Product Management Committee Local Branches Local Sub-branches
Bidding Committee Sub-branches in the Urban District of Zhengzhou Secondary Sub-branches Investment Banking Approval Committee
Credit Approval Committee Trade FinanceDepartment Development Department Party Affairs Department Party Affairs Management Department Operations Management Institution Development Science and Technology Finance and Accounting Compliance Department Credit CardDepartment Discipline Supervisory Interbank Department Financial Department Head Office ofSales Security Department Corporate Business Electronic Banking Administration and Asset Management Risk Management Human Resources Financial Markets Legal Department of SmallBusiness Credit Approval Retail Banking Management Committee of General Office Department Department Department Department Department Department Department Department Department Department Department Customer Manager Department Office Marketing and Promotion Committee Asset and Liability Management Committee 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
Corporate Governance Structure
We have established and further developed a corporate governance structure comprising shareholders’ general meeting, the Board, the Board of Supervisors and senior management.
Our Board is accountable to our shareholders’ general meeting and is responsible for, among other things, 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 the Audit Committee, the Nomination Committee, the Remuneration and Evaluation Committee, the Related Party Transactions Control Committee, the Risk Management Committee and the Strategic Development Committee. Each committee reports to our Board. Please see “Directors, Supervisors and Senior Management — Committees under the Board of Directors” for the functions of each committee.
Our Board of Supervisors is accountable to our shareholders’ general meeting and is responsible for supervising the performance of duties by the Board and senior management as well as our finance, risk management and internal control. The Board of Supervisors has established the Nomination Committee and the 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 the Bank. The President of the Bank is empowered to be primarily responsible for carrying out the decisions made by our Board and reports to our Board. For functions of our senior management, please see “Directors, Supervisors and Senior Management — Senior Management”.
OPERATIONAL REFORM
Risk Management and Internal Control
In recent years, we have been continuously building a comprehensive risk management structure by implementing various measures to improve our overall risk management and internal control standards. These measures include formulating the Internal Control Management Measures, the Case Management Measures and establishing different departments or committees to manage and monitor various types of risks. Please see “Risk Management” for more information about our risk management and internal control.
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OUR HISTORY AND OPERATIONAL REFORM
Information Technology
We have carried 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.
March 2013 Our new data center was officially launched and the architecture of our information system with the core business system and the data center system as the dual cores was preliminarily formed, which laid a solid foundation for implementation of management accounting.
May 2013 The comprehensive construction of our application-level same-city disaster recovery and data-level offsite disaster recovery system was completed, which enabled the security structure of our information system to reach a new level.
November 2013 Development of our new website completed and was successfully launched.
Development of each of our mobile banking versions, such as Apple, Android, WAP, Windows 8 versions completed and was successfully launched. WeChat Banking was also initially established, while our e-channels further expanded.
December 2013 Our new customer service system was officially launched, which provided better services to and experiences for customers.
Our international settlement system was successfully launched. This system together with the bill direct discount, guaranteed discount for commercial bills and factoring businesses and the letters of credit for domestic trade businesses launched subsequently, which preliminarily improved our trade finance business system.
March 2014 Our customer relationship management (CRM) system was officially launched. Based on advanced computing technology, CRM has achieved customer identification and management among our different management departments and provided a better tool to assist in the next step of customer relationship management.
June 2014 Our small enterprise online loan system was officially launched. Online loan is our innovative project in Internet finance innovation, i.e. the provision of convenient financial services to customers through the operating model of combining online with offline under controlled risks.
We launched the “Ding Rong Yi” (鼎融易) Internet financial service platform. The “Ding Rong Yi” platform will focus on the five core functions of electronic accounts, payment for utilities, investment, financing and e-commerce through the organic combination of direct banking and e-commerce services to provide more comprehensive and faster Internet financial services to all users.
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OUR HISTORY AND OPERATIONAL REFORM
July 2014 Our bill system was officially launched.
September 2014 Our credit card issuance system and the ancillary system within the Bank were transformed and officially launched. The launch of our credit and issuance system provided technical support for the issuance of our credit card products and the transformation of the ancillary system within the Bank provided strong support for credit card business in terms of accounting, repayment, product application channels and so on.
Our smart counter was launched. Smart counter equipment can help users achieve comprehensive financial services. Following the launch of smart counter, functions such as applying for new personal cards, electronic banking contract signing, transfer balance enquiry, contract signing for payment of utilities, purchase of wealth management products, recharge for mobile phone call charges and change of personal information can be achieved.
Virtual Teller Machine (VTM) was officially launched. Through audio, video call and desktop sharing functions between users and remote tellers, VTM device allows users to realize comprehensive financial services, and individual can self-serve in completing various financial services, such as personal information collection, scanning and self-serve card issuance, which can be completed by users through automated processes of VTM. Users can complete self-serve transactions by completion of business application and submit relevant receipts when using it.
November 2014 Our internal audit system was officially launched. The set up of such system has improved the audit efficiency, regulated the audit procedure, prevented business risks and improved the operation and management standard, thereby providing support for creating the third line of defence against our business risks in a better and more effective way.
Our “Hui Shang Dai (惠商貸)” product was official launched. Such product uses our “Hui Shang Dai” card as a medium to give ratings to partners in the wholesale market and extend credit to single merchants in the wholesale market. The launch of such product has enhanced the degree of dependence of merchants on us and promoted the sustainability of our small enterprise loan brand.
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