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Underwriting of Tier-2 Capital Bonds for Commercial Banks

I. Description
Tier-2 capital bonds of commercial banks mean the bonds publicly issued by commercial banks to increase their tier-2 capital.
It is a type of financial bonds, and the maturities and types of bond issues can be flexibly designed based on the financing needs of issuers.

II. Target Customers
The product is applicable to commercial banks in need of replenishing their capital and incorporated in the territory of the PRC (excluding Hong Kong, Macau and Taiwan), provided that they shall meet the following access conditions:
1. Implement a five-category classification of loans, with little classification deviation;
2. Core capital adequacy shall be no lower than 5%;
3. Loan loss allowance is fully provided ;
4. Have a sound corporate governance structure and mechanism;
5. There are no major violations of laws or regulations in the last three years; and
6. Other conditions required by the PBOC.

III. Function
The product is mainly intended to increase the tier-2 capital of commercial banks, as it can effectively boost their capital adequacy.

IV. Features and Advantages
1. Strong underwriting strength: ICBC is one of the Grade-A underwriters for T-bonds issued by the Ministry of Finance, tier-1 trader in open market operations of the PBOC; was the first domestic commercial bank that obtained the qualification for underwriting corporate debt financing instruments; and has been rated as outstanding underwriter and outstanding trader for many times by the Ministry of Finance and the PBOC.
2. Abundant experience in underwriting: ICBC has a professional underwriting service team with abundant experience in bond underwriting, and has established a sound and effective internal operating mechanism in terms of customer service, credit risk review & assessment, and underwriting trade execution.
3. Good communication and cooperation relations: ICBC has established and maintained good communication and coordination relations with regulatory authorities, and solid business cooperation relations with investors, and can hence effectively ensure the smooth issuance of products.

V. Price
The interest rate on the product varies with maturities, customer rating levels and market conditions. So the product is priced with reference to market prices and in compliance with the guiding opinions of regulatory authorities on issue prices.

VI. Service Channels and Hours
Commercial banking customers may contact ICBC directly during business hours to apply for the product, based on their financing needs.

VII. Application Procedures
1. Project review: Customers shall first submit an application to ICBC according to the requirements of regulatory authorities. Then ICBC will conduct due diligence and credit risk reviews, and sign relevant agreements with the applicants.
2. Registration application: ICBC submits project registration application materials to the CBRC and PBOC for review and approval.
3. Product issuance: Upon approval of a project by regulatory authorities, ICBC will promptly arrange for bond issuance.

VIII. Typical Case
Since 2013, ICBC, as lead underwriter, has completed the issuance of RMB20-billion tier-2 capital bonds for China Minsheng Bank; RMB8-billion tier-2 capital bonds for Evergrowing Bank; and RMB5-billion tier-2 capital bonds for Bank of Nanjing.

Note: The contents on this page are for reference only. The ultimate power of interpretation is under the Industrial and Commercial Bank of China Limited. For part of the contents, notice and specific regulations of local branches shall prevail. For part of the contents, notice and specific regulations of local branches shall prevail.

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