Announcement on Related Party Transactions

The Company and all members of the Board of Directors hereby warrant that the information contained in this announcement is true, accurate and complete, and assume joint and several liabilities for any false representation, misleading statement or material omission.

Important Notes:
1．Transaction content
The third meeting of the Company’s seventh Board of Directors reviewed and approved the proposal on granting an internal basic credit line to Hang Seng Bank Limited(including Hang Seng Bank (China) Limited), and agreed to grant an internal basic credit line of RMB2 billion to Hang Seng Bank Limited(including Hang Seng Bank(China) Limited), the credit line is effective for one year. 
2. Avoidance
The transaction is related party transaction, and director Mr. Andrew Fung avoided the voting on the related party transaction with Hang Seng Bank.
3. Impact of the related party transaction
The related party transaction is a normal comprehensive credit-granting business of the Company, and has no significant impact on the Company’s normal operation and financial position.

I. Overview of the Related Party Transaction
Pursuant to the rules and regulations of the Company Law, the Administrative Measures for the Related Party Transactions between Commercial Banks and Insiders and Shareholders Thereof and the Articles of Association of the Company, if credit line of the aforementioned related party transaction is above 1% and below 10% of the Company’s net capital at the end of previous quarter, the said transaction should be deemed as a material related party transaction, and shall be reviewed for its rationality and impartiality by the Audit and Related Party Transaction Control Committee before being submitted to the Board of Directors for approval.
The third meeting of the Audit and Related Party Transaction Control Committee of the seventh Board of Directors was held on March 24, 2011. The meeting reviewed and agreed to submit the aforementioned related party transaction proposal to the Board of Directors for review and deliberation. On March 25, 2011, the aforementioned related party transaction proposal was approved in the third meeting of the seventh Board of Directors.
II. Introduction to the Related Parties
1, Hang Seng Bank Limited; registered capital of HKD11 billion; legal address: NO. 83, Des Voeux Road Central, Hong Kong. Hang Seng Bank is the second largest shareholder of the Company, holding a stake of 12.80%. It is a related party of the Company. As a major member of HSBC group, Hang Seng Bank Limited is Hong Kong’s largest listed bank in terms of market capitalization, and is among the top 30 banks globally in terms of market value.
2, Hang Seng Bank (China) Ltd. was established in Shanghai on May 28, 2007 as a wholly-owned subsidiary with registered capital of RMB4.5 billion. It is also a related party of the Company.
III. Main content and pricing policy of the related transactions
The credit granting conditions for the aforementioned related party transactions are neither more preferential than the conditions for other borrowers applying for similar credit, nor lower than the conditions by which the related party company applies for credit in other banks. The Company grants the credit line to the aforementioned related parties according to regular business transaction conditions, and charges interest at the fair and reasonable market interest rate.
IV. Purpose of the related party transaction and their influence on the listed company
The related party transaction is normal credit granting operation of the Company, and has no significant impact on the Company’s normal operation and financial position.
V. Opinion of independent directors
The Company’s independent directors, Mr. Ba Shusong, Mr. Xu Bin, Mr. Li Ruoshan, Mr. Wu Shinong and Mr. Lim Peng Khoon, expressed the following independent opinion on the related party transaction:
1. Fairness: The said related party transaction is priced in the principle of equivalent compensation and fair pricing. There has been no breach of the principles of openness, equality and fairness, nor has there been any behavior infringing the interests of the Company or its small and medium shareholders.
2. Formality. The third meeting of the Audit and Related Party Transaction Control Committee of the seventh Board of Directors was held on March 24, 2011. The meeting reviewed the Proposal on Granting A Basic Credit Line to Hang Seng Bank (Including Hang Seng Bank (China) Limited), and agreed to submit it to the Board of Directors for review and deliberation. The third meeting of the seventh Board of Directors reviewed and approved the aforesaid material related party transaction. The approval formality of the above material related transaction complied with applicable laws, rules and regulations as well as the Articles of Association of the Company.
VI. List of documents for future reference
1. Resolution of the Audit and Related Party Transaction Control Committee of the Board of Directors
2. Resolution of the Board of Directors
3. Independent opinion signed and confirmed by independent directors.

Board of Directors
Industrial Bank Co., Ltd.
March 28, 2011