[2006] No. 11

In order to regulate the activities of issuance of mixed capital securities by commercial banks and protect the rights of investors, according to The People's Bank of China Law and Measures for the Administration of Issuance of Financial Securities in Securities Market between National Banks (hereinafter referred to as Administrative Measures), and the relevant issues on issuance of mixed capital securities by commercial banks are hereby announced as follows:

1. Mixed capital securities referred to in this Announcement is the securities issued by commercial banks with the following characteristics:


1. The term is beyond 15 years and it cannot be redeemed within 10 years after issuance. Issuers are entitled to one-time redeem 10 years later after issuance. In case issuers fail to perform the right to redeem, the rate of the mixed capital securities may be approximately raised.
2. Before the expiration of the mixed capital securities, if the key capital abundance rate of issuers is lower than 4%, issuers may postpone to pay the interest; if the following circumstances happen at the same time: the total of surplus reserve and undistributed profit in the latest audited balance sheet is negative and no cash dividend is distributed to ordinary shareholders in the last 12 months, issuers must postpone to pay the interest. In case failure to satisfy the conditions for postponing paying the interest, issuers must immediately pay the interest and the multiple interest of the interest.
3. When issuers are liquidated, the turn of liquidation for mixed capital securities' principal and interest shall be lower than the one of general debts and hypo-level debts, but higher than the one of shareholding capital.
4. When the expiration of the mixed capital securities meets, if issuers are unable to pay the debts whose liquidation turn is higher than the securities or payment to the securities will lead to be unable to pay the debts whose turn is higher than the one of mixed capital securities, issuers may postpone to pay the principal and interest of the securities. After getting better, issuers shall continue to perform the obligations to pay principal and interest. The overdue principal and interest shall be calculated the interest according to the nominal value interest off the mixed capital securities.


2. Issuance of the mixed capital securities by commercial banks shall confirm with the relevant requirements of Article 7 of the Administrative Measures and commercial banks shall submit the issuance application documents to the People's Bank of China in accordance with the requirements of Article 10 of the Administrative Measures, meanwhile, submit the information regard capital abundance rate calculated as required by supervisory departments and other information on reimbursement of principal and interest of debts in the last 3 years.


3. Mixed capital securities may be issued in public or in direction. When issuing mixed capital securities, issuers shall disclose the information regard capital abundance rate calculated as required by supervisory departments and other information on reimbursement of principal and interest of debts in the last 3 years in accordance with the relevant requirements of the Administrative Measures.


4. Issuers shall make notes regarding risks in Prospectus and issuance announcement, emphatically addressing the liquidation turn of the mixed capital securities and the risks regarding overdue payment of interest before expiration and overdue payment of principal and interest upon expiration.


5. Issuance of the mixed capital securities in public or in direction shall conduct credit rating. Within the term of mixed capital securities, credit rating institutions shall regularly and irregularly conduct tracing rating with regard to the mixed capital securities and publicize tracing rating report once a year and publicize tracing rating information once a month. With regard to the material events that would influence the performance of debts by issuers, credit rating institutions shall timely provide tracing rating report.


6. If issuers intend to redeem in advance mixed capital securities, overdue payment to interest or overdue payment to principal and interest upon expiration of mixed capital securities, issuers shall file with the People's Bank of China 5 working days in advance and disclose via the website of China Money and China Bond, meanwhile, disclose in the annual financial report as major accounting matters.


7. Within the term of the mixed capital securities, issuers shall quarterly disclose the financial information. If the mixed capital securities are issued in public, issuers shall disclose the information on capital abundance rate and other information on payment to other debts when making payment to the interest of securities. If listing companies, commercial banks shall disclose the payment to dividend of ordinary shares as well.


8. Investors to the mixed capital securities shall be fully aware of and bear by themselves the risks brought from investing mixed capital securities. When investing mixed capital securities, the relevant authorities designated in Articles of Association or similar documents shall issue the written authorization documents agreeing investing mixed capital securities and file with Nation Interbank Funding Centre. The authorization documents shall include: investors are aware of the risks for investing mixed capital securities; investors are qualified with relevant inter-control system and risks controlling ability.


9. The issuance number of mixed capital securities and the method for putting raised-capital into supplementary capital shall be executed in accordance with the relevant requirements of supervisory departments.


10. The unsettled matters in this Announcement shall be executed in accordance with the relevant requirements of the Administrative Measures.

The People's Bank of China

September 5, 2006