On April 21, ICBC confirmed that State has officially approved ICBC Shareholding Restructuring Plan.

According to the principle of "One Policy for One Bank" in State-owned Bank reform, ICBC shareholding restructuring involved rational usage of national resources and proceed under State support and ICBC own efforts. Central SAFE Investments Ltd. injected USD 15 billion (RMB 124 billion) of new capital fund and retain the RMB 124 billion capital fund originated from Ministry of Finance at ICBC. The rest served as risk allocated reserves. This let ICBC nucleus capital stood at RMB 248 billion.

Mr. Jiang Jianqing, President of ICBC, said: ICBC shareholding restructuring is one major strategic decision made by Central Party and State Council, and another major move to fully implement the Directives of The Sixteenth National Congress of the CPC and the Third Plenary Session of The Sixteenth National Congress of the CPC and to further reform the banking sector. It is also an important milestone for ICBC to become a modern financial corporation. Appropriate decisions made by Central Party and State Council on ICBC shareholding restructuring is an indication that State is determined to launch banking reform, as well as their full confidence and high expectation on ICBC.

Mr. Jiang Jianqing said, shareholding restructuring is an ultimate change to ICBC, a new historic breakthrough. He also pointed out this is also a complex and high-standard system engineering, a "reform that cannot be afford to lose". All ICBC staff and Party personnel will all wholeheartedly establish a modern financial corporation as our target. We will shoulder this historic task with our utmost responsibilities and dedication to open another new horizon. ICBC will seriously investigate concerned responsible persons when disposal of non-performing assets in order to stop any behavior in escaping banking debts.

Overall objective of ICBC shareholding restructuring is: speed up the reform and convert operating mechanism focusing on complete modern equity system and modern corporate governance system in accordance with modern commercial banking requirements. Complete shareholding restructuring in 2005 and create conditions to seek for overseas listing opportunities. Establish a comprehensive modern financial corporate system. Ultimate aim is to transform ICBC into a large modern commercial bank with sufficient capital, strict internal control, safe operation, good service and profit, main operating management index of medium-to-high standard met with international counterparts, and strong international competitiveness.

During shareholding restructuring, ICBC will concentrate in the following 10 items of work. 1. Actively worked with concerned State Departments to build a modern corporate government framework including Shareholders Meetings, Board of Directors, Supervisory Board and High-Management Team. Introduce Independent Director System and set up special committees under Board of Directors. 2. Formulate mid- and long-term development strategic plan. 3. Institute a new operating performance assessment system. 4. Restructure organization structure and business flow. 5. Complete comprehensive risk management and internal control scheme. 6. Establish discreet, standardized and transparent financial accounting system. 7. Complete capital management and operation mechanism. 8. Establish information disclosure and reporting system that met with capital market requirements. 9. Establish market-oriented human resources management system and incentive-restraint mechanism. 10. Further improve informatization of management.

ICBC contribute tremendously to national economy since inception 20 years ago. ICBC also undertake massive policy tasks and system conversion costs. Risks are accumulated considerably. In recent years, under the aegis of State Policy, ICBC has marked improvement in operation through promotion in overall reform, strengthen the internal management and speed up the innovative development. However, inadequate capital and heavy burden on non-performing assets seriously refrain ICBC from further reform, which affect ICBC competitiveness in international. This time of shareholding restructuring under the support of State Policy will ultimately solve the historic problem that plagued ICBC steady operation and healthy development. More important, through shareholding restructuring, equity system initiation and corporate governance structure reform, fundamental changes in management system and operating mechanism will soon fall into play and modern financial corporation system can be fully established.

At this time, State support ICBC shareholding restructuring through rational utilization of resources. Now has the right condition to start ICBC shareholding reform. First, the whole country is now following the Directions of The Sixteenth National Congress of the CPC and the Third Plenary Session of The Sixteenth National Congress of the CPC to manage scientifically. Macro control has received effective results. National economy maintained robust growth. National financial income and foreign exchanges reserves continued significant increase. All of these offer a relaxed external environment and resources bases for ICBC shareholding reform.

From ICBC itself, recent years of efforts have created a certain internal conditions for its shareholding reform: Strong profitability, over RMB 220 billion of accumulative operating profits earned between 2000 and 2004. ICBC will have strong profitability potential in the next couple of years. Assets quality continued to improve. Balance of ICBC non-performing assets is down over RMB 200 billion net since 2000. Rate of non-performing loan decreased around 4 percentage points averagely per year.. ICBC rate of non-performing loan is around 19% in 2004. Moreover, quality of newly-increased loan is good. Rate of non-performing loan after 1999 is only 1.6%. Advanced management information system, where an all-in-one business processing technology platform is in place. Data are consolidated to support a comprehensive e-banking product scheme. Risk control and internal management are significantly improved. Systematic risk circumvention strategy is instituted. A robust operating pattern has been laid.