Securities Abbreviation: Industrial Bank Securities Code: 601166 No.:T2014-20
Industrial Bank Co., Ltd.
Announcement on the Associated
Transaction with Hang Seng Bank
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:
i. Transaction Contents:
On June 6, 2014, the 6th session of the 8th Board of Directors of the Company approved, after deliberation, the Proposal on Granting the Limit of Associated Transactions to Hang Seng Bank (including Hang Seng Bank (China) Ltd), agreeing to grant Hang Seng Bank (including Hang Seng Bank (China) Ltd) an internal basic credit line of RMB 3 billion, and a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 5 billion; and the granting period is 2 years.
ii. Issue Concerning Withdrawal from Voting: This transaction is an associated transaction, so Mr. Feng Xiaozhong, the associated director, withdrew from voting.
iii. Influence of associated transactions: The above associated transaction is regular business of the Company within the scope of normal business, so they have no significant influence on the business activities and financial situation of the Company and will not affect the independence of the Company.
I. Overview of this Associated Transaction
The 6th session of the 8th Board of Directors of the Company approved, after deliberation, the Proposal on Granting the Limit of Associated Transactions to Hang Seng Bank (including Hang Seng Bank (China) Ltd), agreeing to grant Hang Seng Bank (including Hang Seng Bank (China) Ltd) an internal basic credit line of RMB 3 billion, and grant Hang Seng Bank (including Hang Seng Bank (China) Ltd) a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 5 billion, and the granting period is 2 years.
II. Introduction of the Associated Parties
i. Basic information of the associated parties
Established in 1933, Hang Seng Bank Limited boasts a capital stock of HKD 9.56 billion, with its legal domicile at No. 83 Des Voeux Road Central, Hong Kong. By December 31, 2013, Hang Seng Bank, as a principal member of the HSBC Group, was the largest listed bank registered locally in Hong Kong, and it is among the world's top 50 banks. Based on classification of customers, the business scope of Hang Seng Bank covers five major business activities, i.e. retail banking and wealth management, commercial banking, corporate banking, and treasury management respectively, as well as other businesses.
Hang Seng Bank (China) Limited (hereinafter referred to as “Hang Seng China” is a wholly-owned affiliate established by Hang Seng Bank in May 2007. Up to now, Hang Seng Bank (China) Limited has established 13 branches and 37 sub-branches in Mainland China.
ii. Association with the listed company
Hang Seng Bank holds 10.87% of total shares of the Company after the non-public offering, being an associated legal person of the Company.
III. Main Contents and Pricing Policies of Associated Transaction
i. Main contents of associated transaction
The Company grants Hang Seng Bank (including Hang Seng Bank (China) Ltd) an internal basic credit line of RMB 3 billion, under which the business types include various credit businesses for which the Company bears the credit risks of the credit receiver (excluding business of repurchase-based credit asset transfer), and grants Hang Seng Bank (including Hang Seng Bank (China) Ltd) a limit of non-credit associated transactions with an annual trading amount not exceeding RMB 5 billion, which can be used for non-credit businesses for asset transfer and service provision, including bond transaction, and the granting period is 2 years.
ii. Pricing policies
As reasonable transactions in the day-to-day business operation of the Company, the above associated transactions, following the general business principles, are conducted under the conditions not preferable to those for similar transactions with non-associated parties, and the interest rate and the price level of other business type are not below the average market level of the same industry in the same period.
In terms of existing transactions, the trading amount only accounts for a small proportion in the total amount of similar transactions. The settlement 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.
IV. Purpose of Associated Transaction and Influence of the Associated Transaction on the Listed Company
The relevant businesses carried out between the Company and Hang Seng Bank (including Hang Seng China) 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 requirements of relevant regulations set down by the regulatory authorities, relevant provisions of the Company’s internal rules, and the interests of the Company and all shareholders. Under no condition, they may impair the interests of the Company as well as small- and medium-sized shareholders, and have unfavorable influence on the current and future financial situation of the Company or the independence of the Company.
V. Opinions from Independent Directors
Independent Directors of the Company, including Mr. Deng Ruilin, Mr. Li Ruoshan, Mr. Zhang Jie, Mr. Zhou Qinye and Mr. Paul M. Theil, expressed the following independent comments on the matter of associated transaction:
1. In the aspect of fairness, as a regular business of the Company within the scope of normal business operation, the above associated transaction is priced under the conditions not preferable to those for similar transactions with non-associated parties, with fair and reasonable trading terms. Conforming to the requirements of relevant regulations set down by the regulatory authorities, relevant provisions of the Company’s internal rules, and the interests of the Company and all shareholders, it may, under no condition, impair the interests of the Company as well as small- and medium-sized shareholders, and have unfavorable influence on the current and future financial situation of the Company or the independence of the Company.
2. In the aspect of procedure, on June 5, 2014, the Audit and Associated Transactions Control Committee of the 8th 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 6th session of the 8th Board of Directors of the Company deliberated and approved the above associated transactions on June 6. The decision-making procedure is in compliance with relevant regulatory requirements and relevant provisions the Articles of Incorporation.
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.
June 6, 2014