Securities Name: Industrial Bank  Securities Code: 601166    No.: T 2014-43

Industrial Bank Co., Ltd.

Announcement on Associated Transactions with the People’s Insurance Company (Group) of China Limited

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:

From October 22 to 27, 2014, the 9th session of the 8th Board of Directors of the Company, by way of communication, deliberated and approved the “Proposal on Granting the Limit of Associated Transactions to the People’s Insurance Company (Group) of China Limited”, agreeing to grant a limit of associated transactions of RMB 9.945 billion to the People’s Insurance Company (Group) of China Limited and its subsidiaries (hereinafter referred to as “PICC associated corporations”), with a valid period of 2 years.

ii. Issue Concerning Withdrawal from Voting: This transaction is an associated transaction, so Mr. Li Liangwen, 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

From October 22 to 27, 2014, the 9th session of the 8th Board of Directors of the Company, by way of communication, deliberated and approved the “Proposal on Granting the Limit of Associated Transactions to the People’s Insurance Company (Group) of China Limited”, agreeing to grant a limit of associated transactions of RMB 9.945 billion to PICC associated corporations, including the internal basic credit line of RMB 5 billion and the limit of non-credit associated transactions with an annual trading amount not exceeding RMB 4.945 billion, with a valid period of 2 years.

II. Introduction of the Associated Parties

i. Basic information of the associated parties

Established in October 1949, the People’s Insurance Company (Group) of China Limited (PICC) is the first national insurance company of the People’s Republic of China, and it is a leading comprehensive insurance and finance group at home, 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. The legal representative of PICC is Wu Yan, and the current registered capital is RMB 42.424 billion. PICC Group launched its IPO at Hong Kong Stock Exchange in December 2012. With businesses covering a broad range of areas, such as property insurance, life insurance, health insurance, asset management, insurance brokerage, trust and fund, PICC Group has established an industrial cluster of insurance and finance and group-based framework of comprehensive operation, offering all-round insurance and financial services for the general public, institutions and groups.

ii. 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% of the total shares of the Company, and they are associated corporations of the Company. Specifically, PICC Property and Casualty Company Limited and PICC Life Insurance Company Limited are both subsidiaries of the People’s Insurance Company (Group) of China Limited.

iii. Use of the previous round of limit of associated transactions

In September 2013, the Board of Directors of the Company, upon deliberation and approval, agreed to grant a limit of associated transactions of RMB 8.412 billion to PICC associated corporations, with a valid period of 1 year. In addition, an additional amount was added to the above limit in June 2014, and after the modification, the limit of associated transactions for PICC associated corporations is as follows: the internal basic credit line of RMB 4.4 billion and the limit of non-credit associated transactions of RMB 5.412 billion. 

During the period of using the previous round of limit of associated transactions, the Company and PICC associated corporations carried out cooperation in a variety of business areas including investment in subordinated debts, derivatives trading, bond repurchase, asset management, and insurance services, and all relevant businesses could be developed in an orderly and normalized way within the limit of associated transactions approved by the Board of Directors.

III. Main Contents and Pricing Policies of Associated Transaction

i. Main contents of associated transaction

The 9th session of the 8th Board of Directors of the Company, by way of communication, deliberated and approved the “Proposal on Granting the Limit of Associated Transactions to the People’s Insurance Company (Group) of China Limited”, agreeing to grant a limit of associated transactions of RMB 9.945 billion to PICC associated corporations, with a valid period of 2 years. Specifically, the internal basic credit line of RMB 5 billion is to be used for financial bond, subordinated debt investment, RMB inter-bank capital lending/borrowing, bond repurchase, guarantee and credit enhancement, RMB interest rate exchange; the limit of non-credit associated transactions with an annual trading amount not exceeding RMB 4.945 billion is used for the types transactions covering businesses of capital business, asset management, asset custody, credit asset transfers and provision of insurance services.

ii. Pricing policies

As reasonable transactions in the regular business operation of the Company, the associated transactions between the Company and PICC associated corporations, following the general business principles, are conducted under the conditions not preferable to those for similar transactions with non-associated parties. In the day-to-day business operation, the above transactions will be concluded according to the general business terms or terms not preferable to those applicable to independent third parties. Based on impartial and reasonable trading terms and fair pricing, such transactions share the same settlement method as non-associated transaction with independent third parties and conform to the provisions of relevant laws, regulations, rules and regulatory requirements.

IV. Purpose of Associated Transaction and Its Influence on the Listed Company

The relevant businesses carried out between the Company and PICC associated corporations 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 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 of Independent Directors

Independent Directors of the Company, including Mr. Li Ruoshan, Mr. Zhou Qinye, Mr. Paul M. Theil, Mr. Zhu Qing and Mr. Liu Shiping 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, during October 22-25, 2014, the Audit and Associated Transactions Control Committee of the 8th Board of Directors of the Company, by way of communication, held a meeting, agreeing, after deliberation, to submit the above proposal on associated transactions to the Board of Directors for deliberation. The 9th session of the 8th Board of Directors of the Company deliberated and approved the above associated transactions. 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.

October 29, 2014