On August 12, ICBC Bond Underwriting Team was established in Beijing. The Team included 40 financial institutions from State-owned Commercial Banks, Shareholding Commercial Banks, City Commercial Banks, Insurance Companies, and Securities Company. On the same day, ICBC published the plan of issuing first batch of Subordinated Bonds in 2005. According to the Bulletin details, total amount of ICBC first batch of Subordinated Bonds issued is 35 billion RMB, the largest Commercial Bank Subordinated Bonds in one single batch in China as of today. ICBC proceeds from issuing the Bond will be used in supplement ICBC affiliated capital to raise capital adequacy ratio. Issuing of the Bond has been approved by Regulatory Department using adopted unified interests rate/interests difference (Holland Mode) tendering method. Bond will be issued to national inter-bank market-organized underwriting team through Bond Issuing System of Peoples' Bank of China.

This bonds includes 3 varieties: 10-year fixed interests rate, 10-year floating interests rate and 15-year fixed interests rate. Of which, RMB 13 billion of 10-year fixed Bond, RMB 9 billion of 10-year floating Bond and RMB 13 billion of 15-yr fixed Bond. Diversified product design in this batch of Bonds offers more choice to investors.

(I) 10-year fixed bond. Coupon rate of first 5 years of interests accrued period is determined by tender. Interests paid by year. Issuer can re-purchase at the end of 5th year after issuing. If Issuer does not exercise re-purchasing rights, coupon rate starting from the 6th interests accrued year is 3 percentage points extra of the original determined by Tender.

(II) 10-year floating bond. Coupon rate is the sum of standard interest rate and basic interest difference. Interest paid by half a year. Standard interest rate is arithmetic weighted average value in the most recent 10 trading days of 7-day re-purchased weighted rate published by China Foreign Exchange Trading Center (China Foreign Exchange Trading System & National Interbank Funding Center) and floated by half a year. Basic interest difference of first 5 years of interest accrued period is determined by tender. Issuer can re-purchase at the end of 5th year after issuing. If Issuer does not exercise re-purchasing rights, basic interest difference starting from the 6th interests accrued year is 1 percentage points extra of the original determined by Tender.

(III) 15-year fixed bond. Coupon rate of first 10 years of interests accrued period is determined by tender. Interests paid by year. Issuer can re-purchase at the end of 10th year after issuing. If Issuer does not exercise re-purchasing rights, coupon rate starting from the 11th interests accrued year is 3 percentage points extra of the original determined by Tender.

Issuing Subordinated Bonds is another major move to strengthen capital base after ICBC financial restructuring. After restructuring at the end of June, ICBC's capital adequacy ratio reached 9.12%, amongst, nucleus capital adequacy rate stood at 8.07%. It is expected that capital adequacy ratio will increase 1 percentage point after successful issue of this batch of Bond. According to ICBC statements, full considerations is given to the capital fund growth requirements for the development of all business services during this time of issuing Subordinated Bonds. ICBC risk exposure and market competitiveness are further enhanced. Level of ICBC share capital return rate is improved. All of these are helping to pave the way for introducing strategic investors and listing after shareholding restructuring.

Currently, ICBC hold leading position in such main banking services as assets scale, deposits and loan and fund settlement in China. Operating results and financial base are on the increase every year. Subordinated Bonds that ICBC issue are highly secure, being assessed as Class AAA by China Cheng Xin International. Apart from its high security and the liquidity carried from Inter-bank Bond Market Exchanges, earnings of the Bonds are higher than that of National Bond of the same period and Policy Financial Debt. Being an investment product variety of highly secure, this batch of Bond is specially suitable for those institutions who have steady fund sources and investment needs such as commercial banks, insurance companies, postal savings, fund companies, finance companies, large corporate and housing provident fund management center.