Stock Code: 5880 COOPERATIVE FINANCIAL HOLDING CO.,LTD. TAIWAN COOPERATIVE FINANCIAL HOLDING CO.,LTD.

ANNUAL REPORT 2014

Proactive．Agile．Innovative ANNUAL REPORT 2013 Proactive．Agile．Innovative

TAIWAN COOPERATIVE FINANCIAL HOLDING CO.,LTD.

77, Guan Qian Road, , Taiwan R.O.C. Tel: +886-2-2311-8811 Fax: +886-2-2311-3699

This annual report is available at our website: http://www.tcfhc.com.tw Copyright© 2014 Taiwan Cooperative Financial Holding Co., Ltd. Printed on April 14, 2015 All Rights Reserved. Printed in Taiwan 04/2015. Spokesperson Taiwan Cooperative Securities Investment Trust Co., Ltd. Kuang-Hua Hu, Executive Vice President （Original name：BNP Paribas TCB Asset Management Co., Ltd. ） ： Tel +886-2-2311-8811 Address：13F., No.85, Sec. 2, Nanjing E. Rd., Zhongshan Dist., Taipei City ： Email [email protected] 104, Taiwan, R.O.C. Tel：+886-2-2181-5999 Deputy Spokesperson Website：http://www.tcb-am.com.tw Mei-Tsu Chen, Executive Vice President Tel：+886-2-2311-8811 BNP Paribas Cardif TCB Life Insurance Co., Ltd. ： Email：[email protected] Address 10F., No.325, Sec. 4, Zhongxiao E. Rd., Da'an Dist., Taipei City 106, Taiwan, R.O.C. Headquarters Tel：+886-2-2772-6772 Website：http://www.tcb-life.com.tw Taiwan Cooperative Financial Holding Co., Ltd. Address：No.77, Guan Qian Road, Zhongzheng Dist., Stock Transfer Agent Taipei City 100,Taiwan, R.O.C. KGI Securities Co., Ltd. Tel：+886-2-2311-8811 Address：5F., No.2, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei Website：http://www.tcfhc.com.tw City 100, Taiwan, R.O.C. Tel：+886-2-2389-2999 Subsidiaries Website：www.kgieworld.com.tw Taiwan Cooperative , Ltd. Address：No.77, Guan Qian Road, Zhongzheng Dist., Auditors Taipei City 100,Taiwan, R.O.C. Deloitte & Touche Tel：+886-2-2311-8811 Address：12F., No.156, Sec. 3, Minsheng E. Rd., Songshan Dist., Taipei Website：http://www.tcb-bank.com.tw City 105, Taiwan, R.O.C. Taiwan Cooperative Bills Finance Corporation Ltd. Tel：+886-2-2545-9988 Address：14F., No.85,87, Sec. 2, Nanjing E. Rd., Website：www.deloitte.com.tw Zhongshan Dist., Taipei City 104, Taiwan, R.O.C. Tel：+886-2-2522-1656 Credit Rating Agency Website：http://www.tcb-bills.com.tw Taiwan Ratings Corp. ： Taiwan Cooperative Securities Co., Ltd. Address 49th Floor Taipei 101 Tower No.7, Xinyi Road, Section 5, Taipei Address：2, 6F., No.325, Sec. 4, Zhongxiao E. Rd., 110,Taiwan, R.O.C. ： Da'an Dist., Taipei City 106, Taiwan, R.O.C. Tel +886-2-8722-5800 Tel：+886-2-2731-9987 Website：http://www.tcfhc-sec.com.tw Standard & Poor's Ratings Services Address：Unit 1, Level 69, International Commerce Centre, 1 Austin Road Co-operative Asset Management Co., Ltd. West, Kowloon, Hong Kong ： Address 7F., No.325, Sec. 4, Zhongxiao E. Rd., Tel：+852-2533-3500 Da'an Dist., Taipei City 106, Taiwan, R.O.C. ： Tel +886-2-8772-0868 Notice to readers ： Website http://www.coamc.com.tw This English version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail. CONTENTS

02 1. Letter to Shareholders

10 2. About TCFHC

12 3. Report of Corporate Governance

20 4. Capital Overview

27 5. Business Operation Overview

35 6. Financial Information

154 7. Financial Status and Risk Management 2 Letter to Shareholders

1. Letter to Shareholders

03 1.1 Review of Business Operations in 2014

07 1.2 2015 Business Plan Summary

09 1.3 Latest Credit Ratings and Evaluation Dates 2014 ANNUAL REPORT

1. Letter to Shareholders 1.1 Review of Business Operations in 2014

Driven by the U.S. continued strong growth, global economy continues to recover from the 2009 recession, although the recovery is not strong enough. European economies, Japan, and Asia’s China-led emerging economies also continue to grow, but their pace has showed signs of weakness since the second quarter of 2014. The US Federal Reserve ends its quantitative easing (QE) bond-buying program to induce increases in short-term interest rate and discourage households/firms from getting loans and spending, 1. Letter to resulting in slower global economic growth. Besides the negative impact of ending QE on international financial markets, European economies are dealing with deflationary pressure and a high unemployment rate. Mainland China’s falling growth rate and the geopolitical risks in the Middle East and Ukraine further Shareholders depress economic activities globally. Therefore global economy for 2015 will have moderate growth, with uneven prospects across the main countries and regions. According to International Monetary Fund, the global real GDP growth is projected to be 3.5%. The 2015 estimation is slightly up from an expected 3.3% in 2014.

Moreover, Taiwan’s economy in 2014 showed a steady growth driven by improved global economic growth. The growth was associated with increases in exports, domestic industrial production, employment, and consumer spending. According to DGBAS’s latest estimation, real GDP grew 1.51%, from 2.23% in 2013 to 3.74% in 2014. Other research and financial institutions also expect Taiwan’s economy to continue expanding in 2015 and project the growth rate to be anywhere from 3.2% - 3.8%.

Given improved economic developments at domestic and international levels, the TCFHC Group registered its best-ever financial performance in 2014. Our consolidated net income totaled NT$10.413 billion, representing a 21% increase over 2013 figures. Our after-tax earnings per share reached NT$1.13. ROE and ROA also reached 6.70% and 0.34%, respectively.

Chairman Tsan-Chang Liao 3 4 Letter to Shareholders

As of the end of 2014, Taiwan Cooperative Financial Holding Co., Ltd.(TCFHC) manages and is comprised of the following businesses: , Ltd.(TCB), Taiwan Cooperative Bills Finance Corporation Ltd.(TCBF), Co-operative Assets Management Co., Ltd.(CAM), Taiwan Cooperative Securities Co., Ltd.(TCS), BNP Paribas Cardif TCB Life Insurance Co., Ltd.( BPCTLI), and Taiwan Cooperative Securities Investment Trust Co., Ltd. (TCSIT)( BNP Paribas TCB Asset Management Co., Ltd. was formally renamed to Taiwan Cooperative Securities Investment Trust Co., Ltd. on April 22, 2014.)

Over the past year, the TCFHC Group has continued to integrate resources of its subsidiaries and has encouraged inter-subsidiary cooperation. Our consolidated net income totaled NT$10.413 billion in 2014, representing a 21% increase over 2013 figures. Also, our after-tax earnings per share reached NT$1.13. ROE and ROA reached 6.70% and 0.34%, respectively. We recorded our best-ever financial performance in 2014, and at TCFHC, we have strived to maintain our long-lasting operation niches in order to pursue growth.

A review of consolidated budget for TCFHC is as follows: Unit: NT$ million, Except EPS in NT$ Actual Amounts Budget Amounts Achieving Rate (%) Net interest 29,771 29,797 99.91 Net revenues and gains other than interest 5,715 18,649 30.65 Total net revenues 35,486 48,446 73.25 Bad-debt expenses and provision for losses on guarantees ( 6,427 ) ( 3,996 ) 39.16 Net change in reserves for insurance liabilities 6,320 ( 10,392 ) 260.82 Operating expenses ( 23,315 ) ( 24,037 ) 103.00 Income before income taxes 12,064 10,021 120.39 Income tax expense ( 1,651 ) ( 1,572 ) 94.97 Net income 10,413 8,449 123.25 Other comprehensive income, net of income tax 269 180 149.44 Total Comprehensive income 10,682 8,629 123.79 Earnings per share 1.13 0.97 116.49

Non-consolidated Budget Review for TCFHC： Unit: NT$ million, Except EPS in NT$ Actual Amounts Budget Amounts Achieving Rate (%) Revenues and gains 10,530 8,716 120.81 Expenses and losses ( 259 ) ( 305 ) 115.08 Income before income tax 10,271 8,411 122.11 Income tax expense ( 35 ) ( 31 ) 87.10 Net income 10,236 8,380 122.15 Other comprehensive income 135 182 74.18 Total comprehensive income 10,371 8,562 121.13 Earnings per share 1.13 0.97 116.49 2014 ANNUAL REPORT

Earnings Reporting for TCFHC and its Subsidiaries： Unit: NT$ million；Except EPS in NT$ Net income before Net income after Earnings per Net profit Return on Return on tax from continuing tax from continuing share ratio (%) assets (%) Equity (%) operations operations TCFHC and its subsidiaries 12,064 10,413 1.13 29.34 0.34 6.70 TCFHC (unconsolidated) 10,271 10,236 1.13 98.05 6.41 6.72 Taiwan Cooperative Bank (unconsolidated) 11,643 10,127 1.45 25.60 0.35 6.99 Taiwan Cooperative Securities 19 14 0.05 3.15 0.17 0.48 Taiwan Cooperative Bills Finance Corporation 321 321 0.90 89.98 0.96 7.31 Co-operative Assets Management (unconsolidated) 359 300 0.70 40.44 5.66 8.04 BNP Paribas Cardif TCB Life Insurance 383 374 0.62 40.34 0.32 6.39 Taiwan Cooperative Securities Investment Trust ( 66 ) ( 66 ) ( 3.20 ) ( 58.57 ) ( 18.31 ) ( 19.76 )

Notes: Net income before/after taxes from continuing operations get round off to the nearest dollar Return on assets= profit after income tax ÷Average assets Return on equity=profit after income tax ÷Average stockholders’ equity Net profit ratio = profit after income tax ÷Total net revenue

In 2014, we also achieved the following accomplishments：

Earnings Performance Our bank (TCB) and its franchises together reported for Group a net profit of NT$10.137 billion in 2014. TCB strengthened the composition of its deposit portfolios and reduced its cost of capital. In addition, governing by the operation principle of quality-quantity duality, TCB provided more high- yield loans to small and medium enterprises as well as loans to overseas enterprises. It also focused on growing its wealth management business in order to gain more profits. Our subsidiaries in life insurance, bills finance, asset management, and securities have maintained stable profitability. They earned net income of NT$374 million, NT$321 million, NT$300 million, and NT$14 million, respectively. Our securities investment trust company made a loss of NT$66 million for the year. In April 2014, we ended the joint venture with BNP Paribas Investment Partners by acquiring 49% shares from BNP Paribas TCB Asset Management Co., Ltd.(rename: Taiwan Cooperative Securities Investment Trust Co., Ltd.). We now wholly own the company, its earnings are slated to rise in 2015.

Co-Marketing Performance To take advantage of the Group’s existing marketing channel and the integrated marketing synergy, our securities company set up 166 counters providing securities-transaction services to our banking customers. It is estimated that the number of shares or contracts traded through these counters represented 62.28% of our total securities trading volume. We hold regular meetings with our subsidiaries to discuss co-marketing performance. In 2014, our two subsidiaries in BNP Paribas TCB Life Insurance Company and Taiwan Cooperative Securities Investment Trust (TCSIT) earned 98.23% of its total premium income and 89.26% of its total fund sales, respectively, through tie-up with our other subsidiaries. Moreover, besides facilitating co- marketing synergies among our subsidiaries, we have continued to expand external marketing channels. 5 6 Letter to Shareholders

International Expansion Plan In response to the policy of encouraging Taiwanese to expand internationally, our bank established several branches and sub-branches overseas in 2014. Taiwan Cooperative Bank (TCB) aims to become a regional bank and focuses its international expansion in countries like China, Southeast Asia countries and those exerting a significant impact upon finance. In 2014, TCB established branches in the Tianjin and Fuzhou of China, respectively. We therefore set the record of establishing two China branches by Taiwanese banks within a year. In addition, the Taiwan Financial Supervisory Commission has approved us to establish a branch in New York City, two sub-branches in Tuek Thla and Pur Senchey of Cambodia, and a branch office in Yangon of Myanmar.

Financial Services Innovation In response to the Bank3.0 Project launched by the Financial Supervisory Commission, our bank has actively developed innovative digital financial services. In particular, our Mobile Bill Pay service won the 7th Best Practices Award: Best Product Innovation hosted by the Taiwan Academy of Banking and Finance. In order to meet the trend of information technology development and the changes in consumer financial behavior, TCB has worked with the Payment Corporation to introduce a mobile credit card and a mobile ATM card onto the market in order to provide our customers with new, convenient and safe mobile payment applications.

Corporate Governance The TCFHC selection of members of the second Board of Directors was held in 2014. We selected three Independent Board Directors in accordance with the relevant laws and regulations. These three board members set up functional committees, including Remuneration Committee and Audit Committee, to exercise the independent judgment in carrying out the responsibilities of a director, and hence protect investor interest. In order to strengthen corporate governance and establish an honest corporate culture, we have adopted both the TCFHC Corporate Governance Best-Practice Principles and the TCFHC Ethical Corporate Management Best Practice Principles.

Corporate Social Responsibility TCB has been encouraging people and communities to exercise by holding a variety of ball games and supporting sporting activities. For the sixth year in a row, TCB received the “Sports Propeller Prize” from the Sports Administration of the Ministry of Education. Also, our life insurance company received the “Award for Excellence Performance on Increasing Insurance Payout” from the Financial Supervisory Commission eight times in a row. At TCFHC, we are committed to doing business in a way that benefits our clients as well as actively contributing to the well-being of the communities in which we operate. In 2014, we reinforced our commitment to Minority Reach and reachable inclusion with financially supporting minorities and by helping underprivileged children to discover their talents. 2014 ANNUAL REPORT

1.2 2015 Business Plan Summary 1.2.1 2015 Operating Principles Optimize capital allocation and efficient use of capital. Targeting of effective cost reduction and superior capital-output ratio. Optimize resources integration of functions and enhance cross-functional operational synergies. Strengthen international expansion and higher proportion of overseas earnings. More investment in human resources and cultivation of international financial talents Enhancing information integration and a quick response to e-finance trends. Implementing effective internal controls and stronger risk management mechanisms. Enhancement of corporate governance and corporate social responsibility. 1.2.2 2015 Operating Objectives Unit: NT$ million Name of Subsidiary Item Budget 2015

Deposits 2,412,481

Taiwan Cooperative Bank Loans 1,985,080

Foreign exchange (US$ million) 100,206

Securities brokerage 405,000 Taiwan Cooperative Securities Securities financing transactions 4,800

Underwriting of bills 219,000

Dealing in bills and bonds 33,500 Taiwan Cooperative Bills Finance Guarantees 20,000

RP 25,000

Co-operative Assets Management Debt Collection 811

BNP Paribas Cardif TCB Life Insurance Annual total premiums 42,572

Taiwan Cooperative Securities Investment Trust Total Fund size 22,947

Note：BNP Paribas TCB Asset Management has been renamed as Taiwan Cooperative Securities Investment Trust Corporation, Ltd. on April, 22,2014.

1.2.3 2015 Key Operating Policies We will focus on augmenting our core capital and picking the best time to raise funds from capital markets in order to further strengthen operational efficiency and fund the Group’s growth needs. We will measure the efficiency of capital usage and plan for optimal capital structure for each of our subsidiary in order to improve the Group’s capital allocation efficiency. In response to the government’s policy of deregulation, we will continue to innovate and come up with new financial products and services that bring added value to customers in order to expand our business scope and further increase the Group’s profitability.

7 8 Letter to Shareholders

We will continue to adjust the Group’s core business structure in order to reduce cost of capital and increase interest-rate spread. In addition, we will focus on growing wealth management business and generating more fee income. We will enhance the Group’s information integration analysis system and construct a parallel processing system to manage our customer’s personal information for improving co-marketing efforts. We will take advantage of our bank’s extensive marketing channels and customer base to enhance the sales of our life insurance and securities investment trust fund products as well as the business of wealth management. We will make efforts to establish more branches and sub-branches overseas in order to speed up our international expansion in the Asia-Pacific region and to become a top regional financial institution. We will monitor the progress of opening up international securities business by our securities company in order to seek out opportunities bring by the establishment of the Taiwan-Singapore cross-border stock trading market and of the Taiwan-Japan cross-border stock trading market. We will continue to attract the needed top talent for implementing cross-functional operational activities. In order to increase the competitiveness of TCFHC, we will continue to provide our employees with diversified learning channels so as to improve their foreign language proficiency and knowledge of international finance. We will enhance the integration of the Group’s e-finance system, expand system capacity and increase system efficiency in order to strengthen our business competitiveness. In response to the rapid development of e-commerce business, we will focus on the changing consumer behavior towards the usage of e-financial products and services and continue to expand cross-industry alliance in order to broaden our third-party payment inbound business. We will enforce internal regulations and handling procedures and actively follow the implementation efficiency in order to further enforce the Group’s internal control system. In order to deepen our capability of risk management, we will implement effective risk management control mechanisms and processes and to monitor credit risk concentrations. We will continue to reinforce our corporate governance framework and through the strong oversight of the role of the Board of Directors conducted by the Auditor Committee in order to balance the rights among employees, communities, and shareholders. By using the Group’s resources to continuously support a number of philanthropic, sporting and cultural activities, we are engaging in actions that further contribute to the social good. 2014 ANNUAL REPORT

1.2.4 Future Development Strategy In 2015, we will focus on augmenting the Group’s core capital, increasing the subsidiary’s capital- output ratio, speeding up the Group’s international expansion plans, and creating more cross- functional operational synergies. We will also implement effective internal controls, enforce good risk management practices, and reinforce our corporate governance framework. Our optimal goal is to expand our operational scale and strengthen our business competitiveness through implementing effective development strategies within. We aim to conduct business in a manner that creates the greatest value for our shareholders. 1.3 Latest Credit Ratings and Evaluation Dates

Rating Scale Company Rating Agency Outlook Effective Date Long-Term Short-Term

Standard & Poor’s BBB- A-3 Stable 2015.03.09 Taiwan Cooperative Financial Holdings Taiwan Ratings twA+ twA-1 Stable 2015.03.09

Standard & Poor’s A- A-2 Stable 2015.02.24 Taiwan Cooperative Bank Taiwan Ratings twAA twA-1+ Stable 2015.02.25

Taiwan Cooperative Bills Finance Fitch AA(twn) F1+(twn) Stable 2015.03.24

Taiwan Cooperative Securities Fitch AA(twn) F1+(twn) Stable 2015.03.24

9 10 Bank Profile

2. About TCFHC 2014 ANNUAL REPORT

2. About TCFHC

Date of Incorporation：December 1st, 2011. Overview：

TCFHC’s original corporate predecessor was incorporated in 1946 under the banking law of Taiwan. Following a series of transactions over a number of years, the TCFHC Group was formed on December 1st, 2011 upon the merger of six subsidiaries. Accordingly, the Group operates through six subsidiaries: Taiwan Cooperative Bank, Ltd. Co-operative Asset Management Co., Ltd., Taiwan Cooperative Bills Finance Corporation, Ltd., Taiwan Cooperative Securities Co., Ltd, Taiwan Cooperative Securities Investment Trust Co. Ltd., and BNP Paribas Cardif TCB Life Insurance Co., Ltd. (the company is a joint venture between TCFHC with 51% of its shareholdings and BNP Paribas Cardif with the remaining 49%). TCFHC is a global diversified financial services holding company whose businesses provide consumers, corporations and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, bills services, securities brokerage trading, wealth management, life insurance services, and investment trust services.

One of our subsidiaries, Taiwan Cooperative Securities Investment Trust Co., Ltd. (its former name is BNP Paribas TCB Asset Management Co., Ltd.), was a joint venture which we held 51% shares of the stock and BNP Paribas Investment Partners had 49% stakes. However, given strategic and operational considerations, we acquired the remaining 49% of shares from BNP Paribas Investment Partners and renamed the company to Taiwan Cooperative Securities Investment Trust Co., Ltd. on April 22, 2014.

The TCFHC Group did not engaged in merger and acquisition activities during the period from January 1st, 2014 to April 14, 2015.

President Shyh-Laang Lin 11 12 Report of Corporate Governance

3. Report of Corporate Governance

14 3.1 Organization

16 3.2 Board Structure and Composition

18 3.3 Status of Corporate Governance and Deviations from “Corporate Governance Best-Practice Principles for Financial Holding Companies” 2014 ANNUAL REPORT

Front row from left, Chairman: Tsan-Chang Liao ; President: Shyh-Laang Lin Back row from left, E.V.P.& General Auditor: Ching-Sung Wang ; Executive Vice President: Kuang-Hua Hu Executive Vice President: Mei-Tsu Chen ; E. V. P. & Chief Compliance Officer: Pi-Chu Wu 13 14 Report of Corporate Governance

3. Report of Corporate Governance 3.1 Organization 3.1.1 Organization Chart

General Meeting of Shareholders

Audit Committee

Remuneration Committee Board of Directors

Risk Management Committee Chairman of Business the Board Management Committee

E.V.P .& General Auditor Investment Committee President

Auditing Secretariat Department, Department, Board of Board of Directors Directors

Executive Vice President Executive Vice President Chief Compliance Officer

Business Information Risk Human Compliance Treasury Administration Development Technology Management Resource &Legal Department Department Department Department Department Department Department 2014 ANNUAL REPORT

3.1.2 Major Corporate Functions Department Function Conducting internal administrative audit; handling of inspection by supervisory authorities; auditing of the Auditing Department administrative work of the Group; evaluating the effectiveness of internal auditing operations of subsidiaries; and follow-up review of auditing deficiencies Board Secretariat Providing supports to both the Shareholder’s meeting and the Board of Director’s meeting; and handling any Department confidential information relating to the Chairman Dealing with the Group’s organizational development, operating policies, strategic alliances, capital planning, investment and M&A activities, corporate governance; detecting and reporting suspicious transactions to prevent Business Development money laundering; implementing anti-terror plan; working on the integration of product planning and marketing Department activities among subsidiaries; and supervision and assistance for other miscellaneous matters pertaining to the business development of the subsidiary Raising and utilization of capital, account management, compilation of financial statements, tax matters, accounting, Treasury Department and other financial matters of the Group; and supervision and assistance for miscellaneous treasury matters pertaining to the operation of the subsidiary Overseeing the Group’s risk management systems, capital adequacy calculation and evaluation procedures, and Risk Management emergency response planning; monitoring internal control systems; and supervision and assistance for other Department miscellaneous matters pertaining to the risk management operation of the subsidiary Compliance & Legal Legal compliance; handling of litigation and non-litigation cases; review of contracts and regulations; and supervision Department and assistance for other miscellaneous legal matters relating to the subsidiary’s operation Planning various information policies; implementing an integrated information system along with information security Information Technology controls for the Group; and supervision and assistance for other miscellaneous information-related matters of the Department subsidiary operation Human Resources Overseeing the Group’s human resources-related matters, such as management, policy formulation, planning of staff Department training; and supervision and assistance for other miscellaneous human resources matters of the subsidiary Overseeing matters related to the investor relations, information disclosure, and external public relations; monitoring Administration the administrative management related matters, such as general affairs, procurement, and stock affairs; and other Department matters related to administrative management, and supervision and assistance for other miscellaneous administrative management-related matters of the subsidiary

3.1.3 Group Structure

As of Dec.31, 2014 Taiwan Cooperative Financial Holding Co., Ltd.

90.02％ owned United Taiwan Bank 100％ owned Taiwan Cooperative Bank, Ltd.

100％ owned Cooperative Insurance 100％ owned Brokers Co., Ltd. Taiwan Cooperative Bills Finance Corporation Ltd.

100％ owned Taiwan Cooperative Securities Co., Ltd.

100％ owned Co-operative Asset 100％ owned Cooperative International Management Co., Ltd. Leasing Corp., Ltd.

100％ owned Taiwan Cooperative Securities Investment Trust Co., Ltd. Note: Given strategic and operational considerations, TCFHC reached a deal with BNP Paribas Investment Partners to buy back the shares it did not own in the BNP 51％ owned BNP Paribas Cardif TCB Life Paribas TCB Asset Management Corporation joint venture on January 16, 2014. It Insurance Co., Ltd. has been renamed to Taiwan Cooperative Securities Investment Trust Corporation, Ltd. after the completion of the deal on April 22,2014. 15 16 Report of Corporate Governance

3.2 Board Structure and Composition 3.2.1 Board of Directors, Independent Board Directors and Executives Officers As of April 14, 2015 Board of Directors

Title Name Title Name

Chairman Tsan-Chang Liao Ming-Shenq Hwang

President & Director Shyh-Laang Lin Independent Board Directors Yao-Kuei Lee

James T.H. Shih Chin-Ming Chung

Shen-Gang Mai

Ching-Tien Hsiao

Jong-Wei Chang

Chung-Fern Wu Directors Shin-Rong Shiah-Hou

Cheng-Hua Fu

Mu-Chin Cheng

Cheng-Lang Tsai

Ruei-Yuan Tsai

As of April 14, 2015 Executive Officers

Title Name

President Shyh-Laang Lin

Executive Vice President Kuang-Hua Hu

Executive Vice President Mei-Tsu Chen

E.V.P. & General Auditor Ching-Sung Wang

E.V.P. & Chief Compliance Officer Pi-Chu Wu

S.V.P. & General Manager Auditing Department Chen-Hsing Tsai

S.V.P. & Chief Secretary Po-Fang Yu

S.V.P. & General Manager, Business Development Department Chung-Yueh Yuan

S.V.P. & General Manager, Human Resource Department Chwan-Jau Lii

S.V.P. & General Manager, Treasury Department Chen-Tsai Chou

S.V.P. & General Manager, Administration Department Chia-Ping Tsai

S.V.P. & General Manager, Compliance & Legal Department Chao-Yu Hsu

S.V.P. & General Manager, Information Technology Department Chien-Hsing Chang

S.V.P. & General Manager, Risk Management Department Shiaw-Yen Lun 2014 ANNUAL REPORT

3.2.2 Professional qualifications and independence analysis of Directors

Meet One of the Following Professional Qualification Requirements, Criteria Independence Criteria(Note) Together with at Least Five Years Work Experience Number of An Instructor or Higher A Judge, Public Prosecutor, Have Work Other Public Position in a Department Attorney, Certified Public Experience in Companies of Commerce, Law, Accountant, or Other the Areas of in Which the Finance, Accounting, Professional or Technical Commerce, Individual is or Other Academic Specialist Who has Passed Law, Finance, Concurrently 1 2 3 4 5 6 7 8 9 10 Department Related to a National Examination or Accounting, Serving as an the Business Needs of the and been Awarded a or Otherwise Independent Director Name Company in a Public or Certificate in a Profession Necessary for the Private Junior College, Necessary for the Business Business of the College or University of the Company Company

Chairman p p p p p p p p p p 0 Tsan-Chang Liao Director p p p p p p p p Shyh-Laang Lin 0 Director p p p p p p p p p p Tsuen-Hua Shih 0 Director p p p p p p p Shen-Gang Mai 0

Director p p p p p p p 0 Ching-Tien Hsiao Director p p p p p p p Jong-Wei Chang 0

Director p p p p p p p p p 2 Chung-Fern Wu Director Shin-Rong Shiah- p p p p p p p p p p 0 Hou Director p p p p p p p p p Cheng-Hua Fu 0 Independent Board Director p p p p p p p p p p p 1 Ming-Shenq Hwang Independent Board Director p p p p p p p p p p p 1 Yao-Kuei Lee Independent Board Director p p p p p p p p p p p 0 Chin-Ming Chung Director p p p p p p p p p Mu-Chin Cheng 0

Director p p p p p p p p p p 0 Cheng-Lang Tsai Director p p p p p p p p p p Ruei-Yuan Tsai 0 Note: Please tick the corresponding boxes if directors have been any of the following during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent board director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. 8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. 9. Not been a person of any conditions defined in Article 30 of the Company Law. 10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law. 17 18 Report of Corporate Governance

3.3 Status of Corporate Governance and Deviations from “Corporate Governance Best-Practice Principles for Financial Holding Companies” Status of Corporate Governance Variances (if any) with the Corporate Governance Best Practice Evaluation Item Principles for Financial YES NO Brief Explanation Holding Companies and reasons for such discrepancies 1. TCFHC’s Shareholding Structure & its Shareholders’ Rights (1) Has there been any p (1) TCFHC has people on staffs who specifically handle investor (1) No deviation internal procedure placed recommendations and complaints. Their contact information is posted on by TCFHC for handling our website. Please refer to the “Shareholder Q&A” under the “Investor shareholder’s suggestions Relations” option. or reports of misconduct TCFHC has entrusted the KGI Securities as an agent to handle stocks and complaints? affairs on behalf of the Group, and the agent follows the guidelines for handling of stock affairs which are formulated according to internal control-related regulations. (2) Has TCFHC well- p (2) TCFHC has well-understood the holding situation of its major (2) No deviation maintained a list of its shareholders from the stock transfer book, which the detail of a transfer major shareholders and is immediately recorded after receiving the approval of the transfer from well-understood these the competent authority, and from the shareholders’ reporting of equity stockholders’ holding changes in accordance with the Article 25 of the Securities Exchange Act situations? and the Article 16 of the Financial Holding Company Act. In addition, TCFHC has posted the Articles 4, 5 and 16 of the Financial Holding Company Act (alone with a downloadable reporting form) to promote voluntarily stockholding reporting under the “Statutory Public Disclosure” option of our website. (3) Has there been any p (3) TCFHC has set up an independent unit to help manage risks for the whole (3) No deviation mechanism put in place Group, and a committee to oversee various types of risks and operating to manage risks and procedures of the TCFHC Group and its subsidiaries. control internal operating TCFHC has established the Criteria for Loans to and Transactions with procedures? Materially Interested Parties by the Taiwan Cooperative Financial Holding Co., Ltd. and its Subsidiaries, setting forth clear rules for loans to and other transactions with materially interested parties by TCFHC and its subsidiaries. 2. Composition and Duties of the Board of Directors (1) Has the TCFHC p (1) Besides the setup of a Remuneration Committee and an Audit Committee, (1) No deviation voluntarily established the TCFHC has not established any other functional committee that other functional met the requirement under Section III of Article 35 of the Corporate committees besides the Governance Best Practice Principles for Financial Holding Companies. Remuneration Committee and the Audit Committee? (2) Has TCFHC regularly p (2) TCFHC appoints an accountant (CPA) and assesses the auditor’s (2) No deviation evaluated the auditor’s independence on an annual basis. independence? 3. Has TCFHC established p TCFHC encourages all of its units and subsidiaries to maintain well No deviation communication channels with communications with stakeholders. stakeholders? 4. Information Disclosure

(1) Has TCFHC built a website p (1) TCFHC has posted information (and has updated periodically) about (1) No deviation to disclose information its financial situation, corporate go