Securities Abbreviation: Industrial Bank Securities Code: 601166 No.: T 2013-30
Industrial Bank Co., Ltd.
Announcement on Associated Transactions
The Company and all the members of the Board of Directors warrant the truthfulness, accuracy and completeness of the announcement and will bear the joint and several liabilities for any false record, misleading statement or major omission in the announcement.
Important content notes:
1. Transaction Contents:
On September 27, 2013, the 20th session of the 7th Board of Directors of the Company deliberated and approved the “Proposal on Determining the Granted Limit of Associated Transactions for the People’s Insurance Company (Group) of China Limited”, agreeing to grant an internal basic credit line of RMB 5 billion to the People’s Insurance Company (Group) of China Limited and its subsidiaries (hereinafter referred to as “PICC associated corporations”), with a term of 1 year. The session agreed to grant PICC associated corporations the limit for non-credit associated transactions with a term of 1 year.
2. Issue concerning withdrawal from voting: No withdrawal from voting is involved in the matter of associated transactions deliberated by the Board of Directors of the Company.
3. Influence of associated transactions: The above associated transactions are regular businesses of the Company within the scope of normal business operation, so they have no significant influence to the business activities and financial situation of the Company and will not affect the independence of the Company.
I. Overview of Associated Transactions
The 20th session of the 7th Board of Directors of the Company deliberated and approved the “Proposal on Determining the Granted Limit of Associated Transactions for the People’s Insurance Company (Group) of China Limited”, agreeing to grant an internal basic credit line of RMB 5 billion to PICC associated corporations, with a term of 1 year. Business types under the credit extension include financial bond, subordinated debt investment, RMB inter-bank capital lending/borrowing and bond repurchase for which the Company bears the credit risks of the credit receiver. The session also agreed to grant PICC associated corporations the limit for non-credit associated transactions with a term of 1 year, and the transaction types include funds market transactions, financial consulting and advising and asset management, wealth management, and integrated services.
II. Introduction of the Associated Parties
A. Basic information of the associated parties
The associated parties of the transaction mainly include:
1. The People’s Insurance Company (Group) of China Limited
The People’s Insurance Company (Group) of China Limited is a comprehensive insurance (finance) corporation, with more than 10 professional subsidiaries including PICC Property and Casualty Company Limited, PICC Asset Management Company Limited, PICC Health Insurance Company Limited, and PICC Life Insurance Company Limited. With businesses covering a broad range of areas, such as property insurance, life insurance, health insurance, asset management, insurance brokerage, trust and fund, the group has established an industrial cluster of insurance and finance and group-bases framework of integrated businesses, offering all-round insurance and financial services for the general public, institutions and groups. The People’s Insurance Company (Group) of China Limited launched its IPO at the Stock Exchange of Hong Kong in December 2012.
2. PICC Property and Casualty Company Limited
PICC Property and Casualty Company Limited is currently the largest property and casualty company in China. Listed at Stock Exchange of Hong Kong in 2003, the company has extended its businesses to a broad scope of property and casualty related insurance areas, such as motorized vehicle insurance, property insurance, shipping cargo insurance, accountability credit insurance, accident health insurance, energy, aviation and space insurance, and rural insurance.
3. PICC Life Insurance Company Limited
PICC Life Insurance Company Limited is national life insurance company, mainly engaging in the following businesses: life insurance, health insurance, accident insurance, personal reinsurance, and investment.
B. Association with the listed company
The People’s Insurance Company (Group) of China Limited, PICC Property and Casualty Company Limited, PICC Life Insurance Company Limited hold 10.87% shares of the total capital stock of the Company in total, and they are associated corporations of the Company. Specifically, PICC Property and Casualty Company Limited and PICC Life Insurance Company Limited are two subsidiaries of the People’s Insurance Company (Group) of China Limited.
III. Main Contents and Pricing Policies of Associated Transaction
A. Main contents of associated transaction
1. Internal basic credit extension. An internal basic credit line of RMB 5 billion to PICC associated corporations, with a term of 1 year is granted to PICC associated corporations, and the business types under the credit extension include financial bond, subordinated debt investment, RMB inter-bank capital lending/borrowing and bond repurchase for which the Company bears the credit risks of the credit receiver. The current balance of PICC associated corporations are covered into the total credit risk control and new credit businesses should be reported for approval on a one-by-one basis.
2. Non-credit associated transaction. The limit for non-credit associated transactions with a term of 1 year is granted to PICC associated corporations and the transaction types include funds market transactions, financial consulting and advising and asset management, wealth management, and integrated services. Specifically, the limit for funds related transactions may not exceed RMB 2.9 billion, and the incomes of handling charges and expenditure of intermediary businesses including wealth management, asset management and insurance purchase may not exceed RMB 512 million in total a year.
B. Pricing policies
The pricing of associated transactions between the Company and PICC associated corporations makes reference to the prices of non-associated transactions with independent third parties. Take the bond spot trading and interest rate exchange which have been carried out as examples. The traders make reasonable pricing according to the term and type, with judgment over the market by reference to the corresponding interest rate curve. For debt repurchase, the traders make reasonable pricing by reference to the monetary market performance based on the situation of fund position.
In terms of the existing transactions, the trading amount only accounts for a small proportion in the total amount of similar transactions. The settling method is identical to that for non-associated transactions with independent third parties while the method and time of payment for such transactions are determined according to business practices.
The associated transactions between the Company and PICC associated corporations adhere to general business principles and are carried out under conditions not preferable to those for similar transactions with non-associated parties. With fair pricing, the transactions meet provisions of relevant laws, regulations, rules and regulatory requirements, and the method and time of payment for such transactions are determined according to business practices.
IV. Purpose of Associated Transaction and Its Influence to the Listed Company
The relevant businesses carried out between the Company and PICC associated incorporations are favorable for promoting further cooperation between the two sides. For the above associated transactions, the Company will conclude them according to the general business terms applicable to day-to-day businesses or terms not preferable to those applicable to independent third parties. The trading terms should be fair and reasonable, tallying with the interests of the Company and all shareholders, the requirements of relevant regulations set down by the regulatory authorities, and relevant provisions of the Company’s internal rules. Under no condition, they may impair the interests of the Company as well as small- and medium-sized shareholders, and have unfavorable influence to the current and future financial situation of the Company or the independence of the Company.
V. Opinions of Independent Directors
Independent Directors of the Company, including Mr. Xu Bin, Mr. Li Ruoshan, Mr. Wu Shinong, Mr. Lin Bingkun, and Mr. Zhou Qinye, expressed the following independent comments on the matter of associated transaction:
1. Fairness. The above limit of associated transaction is of regular business of the Company within the scope of normal business operation. In addition, the pricing is made under conditions not preferable to those for similar transactions with non-associated parties and the trading terms are fair and reasonable, not impairing the interests of the Company and shareholders, especially small- and medium-sized shareholders.
2. Procedure. On September 27, 2013, the Audit and Associated Transactions Control Committee of the Board of Directors of the Company held a meeting, agreeing, after deliberation, to submit the above proposal on associated transactions to the Board of Directors for deliberation. The 20th session of the 7th Board of Directors of the Company deliberated and approved the above associated transactions on the same day. The decision-making procedure is in compliance with relevant regulatory requirements and relevant provisions the articles of association.
VI. Catalog of Documents for Reference
1. Resolution of the Audit and Associated Transactions Control Committee of the Board of Directors
2. Resolution of the Board of Directors
3. Independent Opinions signed and confirmed by independent directors.
It is hereby to announce as foregoing.
Board of Directors of Industrial Bank Co., Ltd.
September 28, 2013