Bank of Communications Issues First RMB Retail Bonds of the Year in Hong Kong, Further Promoting the Financial Industry Development in Mainland and Hong Kong

July 16, 2008 saw the issuing ceremony of Bank of Communications RMB retail bonds in Hong Kong. The bank announces that it is to issue a total amount of 3 billion yuan of retail bonds in Hong Kong between July 17 and July 23, making it the first RMB bonds issued in Hong Kong by mainland financial institutions in the year.

The RMB retail bonds launched by the bank have a face value of 10,000 yuan, with a term of 2 years and a face annual interest rate of 3.25%, with interest paid every six months. The fund collected from the bond issuance will be used for loans release, bank current capital, and general corporate usages.

The joint banks for the bond issuance are Bank of Communications International (Asia) Co., LTD., Bank of China (Hong Kong) Limited, Bank of Communications Hong Kong Branch and HSBC. The retail bonds will be sold at the branches and subsidiaries of the 17 banks, including Bank of China (Hong Kong), Bank of Communications Hong Kong Branch, Bank of East Asia, Construction Bank of China (Asia), Chiyu Bank, Chong Hing Bank, CITIC KA WAH Bank, Dah Sing Bank, DBS Bank, Hang Seng Bank, HSBC, Industrial and Commercial Bank of China (Asia), Nanyang Commercial Bank, Shanghai Commercial Bank, Standard Chartered Bank, Wing Hang Bank, and Wing Lung Bank in Hong Kong.

“Bank of Communications hereby issues the RMB retail bonds in Hong Kong for the first time in 2008 to further reflect the bank’s business concept of promoting financial industry development. The year 2008 is also the 100th anniversary of Bank of Communications. Based on its century-old solid foundation, the bank provides new investment opportunities for the financial market of mainland China and Hong Kong, promoting the economic integration between the two. The issuance of RMB retail bonds in Hong Kong by Bank of Communications is not only an important milestone in the bank’s business development and important for furthering the financial development in mainland China and Hong Kong, but also helps to enhance the position of RMB bonds in the international financial market.” said Yu Yali, vice president of Bank of Communications, at the ceremony.

BOCOM's Profile

Founded in 1908, Bank of Communications (BOCOM) is one of four oldest banks in China and one of the early note-issuing banks of China. In 1958, while the Hong Kong Branch continued to operate, the mainland business of BOCOM was merged with People’s Bank of China and the People’s Construction Bank of China on BOCOM’s foundation. To operate in line with economic reforms and development, BOCOM was restructured on July 24, 1986 with approval from the State Council and began operation anew on April 1, 1987, thus becoming China’s first state-owned shareholding commercial bank. Its head office was in Shanghai.

As China’s first national shareholding commercial bank, BOCOM has been playing two roles as the successor to a century-old national banking brand and the pioneer of China’s banking reform since its re-establishment. BOCOM has achieved six “firsts” in China’s banking reform and development: the first to implement shareholding system for its capital and mode of ownership form; the first to command an organizational structure based on market rules and cost/return rules; the first to introduce competition into the banking industry in China; the first to introduce assets/liability ratio management and apply it for regulating business operations and risk; the first to build new bank/enterprise relationships based on two-way selection; and the first commercial bank to integrate banking, insurance and securities businesses. BOCOM’s experience in reform and development paves the way for the development of shareholding commercial banks in China and exemplifies the banking reform of China.

In June 2004, with the banking reform in China well under way, the Sate Council approved BOCOM’s general plan on deepening the reform of its shareholding structure in a bid to further develop BOCOM into a modern banking enterprise under a century old national brand with improved corporate governance, adequate capital, strict internal controls, safe operations, excellent services and return, and strong international competitiveness. Through the reform, BOCOM has completed financial reorganization, successfully introduced mainland and overseas strategic investors like HSBC, the national Social Security Fund and China SAFE Investment Ltd., and enhanced its organizational structure. On June 23, 2005, BOCOM was listed in Hong Kong, the first China based commercial bank of its kind to get listed outside of the Chinese mainland. On May 15, 2007, BOCOM was listed in Shanghai Stock Exchange. Now BOCOM has grown into a well-established modern commercial bank operating under a century old national brand with its “well-defined development strategy, perfected corporate governance, well developed banking network, advanced operation and management, quality banking service and sound financial status”.

Well-defined development strategy: BOCOM began strategic transformation of its management and development in 2005 in light of its sizeable achievements in shareholding system reform, in order to accommodate the rather complicated external operational environment, the increasingly rigid capital restriction and the ongoing, gradual interest rate reorientation towards the market. Strategically, BOCOM aims at developing itself into “an international, innovative, integrated, operation-intensive, highly regulated and management-advanced” first-class financial holding conglomerate.

Perfected corporate governance: BOCOM’s equity structure has become more diversified after the establishment of fundamental system and structure for corporate governance. BoCom’s corporate governance continues to be improved and well-standardized. In compliance with relevant requirements concerning public holding bank, domestic and international regulatory standards, BoCom established a highly professional and international Board of Directors, Board of Supervisors responsible to the Shareholders’ Meeting, strengthened the special functions under the Board of Directors and Board of Supervisors. The senior management performs the operations and management as authorized by the Board of Directors. The Board of Directors, the senior management, and the Board of Supervisors have been proven to adequately fulfill their duties of decision-making, operations and management, and supervision respectively. A basic system has been set up for the efficient operation and coordination of general meetings, board of directors, board of supervisors and the senior management.

Well-positioned branch network: BOCOM has a nationwide and internationally oriented business network, with branches and outlets in developed regions, central cities and international financial centers. The Bank has 2612 outlets in 148 major cities in mainland China. Overseas, BOCOM has set up branches in New York, Tokyo, Hong Kong, Singapore, Seoul, Macao and Frankfurt as well as a representative office in London. We have also established correspondent relations with 1117 banks in 125 countries or regions. BOCOM has a staff of 61,200 employees.

Advanced operation and management: BOCOM adheres to the business philosophy of “Development is the absolute principle, the bank’s priority business; quality is the absolute requirement, the bank’s priority obligation; and efficiency is the absolute task, the bank’s priority target”. BOCOM places equal emphasis on business development and risk control. We have implemented an incentive and requirement system centering on evaluation of capital performance, set up a comprehensive risk management system for furthering the rebuilding our organization structure and promoting the vertical reform of business management. BOCOM has completed China’s leading data concentration project. Based on the practices of advanced international banks, BoCom devoted great efforts in building a procedural bank to optimize the business process. Major progress has been made in back-office centralization and organizational restructuring. A vertical, independent and professional management framework has been set up for the credit management and auditing lines. At the same time, in accordance with the requirement of “mutual understanding, mutual benefits, extended cooperation and common development”, BOCOM has been closely working with HSBC through introducing advanced concepts, technologies and products, which brings a positive influence in the business operation and management of BOCOM.

Quality banking services: Capitalizing on its advantages, BOCOM has kept exploring for new developments of banking products, banking tools and banking systems, and formed a business system featuring diversified products and advanced technical means. Combining the traditional “one-to-one” service network and all-directional modern electronic service channels, BOCOM now provides diversified and comprehensive professional services in such fields as corporate banking, personal banking, international banking and fee-based business. The Bank focuses on providing high-quality service to high and medium net-worth customers through its “OTO Fortune” and “BOCOM Fortune” brand. BOCOM has developed a range of branded products well-represented by “FX Easy”, “Man Jin Bao”, “Ying Tong Account”, “Pacific card”, “Nationwide Through”, “Zhan Ye Tong” and “Fund Supermarket”, taking up a large market share in the industry. The dual-currency credit card developed jointly with HSBC, known as “the Global Card for the Chinese”, has reached a number of cards in force totaling 3 million. In 2007, the Bank achieved substantial progress in universal banking. BOCOM Shroders Fund Management Co., Ltd has issued 5 funds in the market, managing 59.458 billion yuan of assets for 2 million customers. The Bank acquired Hubei International Trust and Investment Co., Ltd., established BOCOM Financial Leasing Company, and set up BOCOM International Holdings Limited in Hong Kong.

Sound financial profile: With the rise of banding and market image after its IPO in Hong Kong, BOCOM accelerated its pace in expanding business development and achieving a healthy, rapid and balanced growth of various business. With its overall strength becoming stronger, BOCOM is leading the industry in terms of financial profile. As of the end of September 2007, BOCOM’s capital adequacy ratio and Tier-1 ratio stood at 14.36%和10.22% respectively. Total assets reached RMB n2,224.202 billion, 110 times more than that at the year of its re-establishment. Its deposit and loan balance registered at RMB 1,611.255 billion and 1,087.895 billion respectively while the after-tax profits was RMB 14.486 billion in the first 9 months of 2007. Annualized ROA and ROE recorded 0.87% and 15.40%, and its impaired loan ratio was 2.07%. According to the rating by the Bankers, BOCOM ranked No. 69 in terms of total assets and No. 68 in terms of tier-1 capital the world’s top 1000 banks.

Today, BOCOM is pushing forward the strategic transformation to build itself into a first-class modern financial corporate. “Communication and Credibility” is the common wish of both BOCOM and you. BOCOM will continue to commit itself in providing better services for customers, creating more value for shareholders and making greater contributions for the community.