1. It is learned that you have made extensive surveys after taking office at China Everbright Group. I’d like to ask if you have formed any work plan for the next step?

　　The general work plan for the next step is to overcome the tough tasks and concentrate our efforts to promote the reform, which can be summarized as “four focuses and one promotion”: focus on seizing the historical opportunity, focus on addressing the primary conflicts, focus on promoting the financial reform and focus on the improvement of internal management to push forward the comprehensive development.

　　2. Mr. Tang used to be the Vice Chairman of China Banking Regulatory Commission and is now Chairman of China Everbright Group and China Everbright Bank. Does the change from a supervisor to a supervisee bring you any different perception?

　　 During the transformation from a judge to an athlete, I feel the former experience as a supervisor is quite helpful to my current role, and it helps us better understand and comply with the relevant regulatory requirements and operate on the principle of prudence and sustainable development.

　　3. What is the most arduous problem for China Everbright Group during the process of reform?

　　The arduousness in the reform of China Everbright Group lies in the complexity of issues. Though the saying that China Everbright Group is like a “cramped and complicated book” may not be completely correct, but objectively speaking, China Everbright Group does face “six complexities”: i.e. complicated assets and business, complicated institutions and equity structure, complicated credit and debt relationship, complicated management system, complicated personnel structure and complicated design of reform plan.

　　The complexity facing China Everbright Group decides the difficulty of restructuring, which was also the reason why China Everbright Group spent such a long time on restructuring. During the restructuring, any specific issue may affect the whole process, such as the emotional impact triggered by separation of financial business from industrial business; personnel reshuffle arising from the changes of equity structure; profit distribution between new and old shareholders and etc. However, there exists an inherent principle in the emergence and development of a matter. The climax of a conflict is also the beginning of a turning point. The “six complicities” push the various conflicts and problems to the climax, and also create conditions and possibilities for the solution of them.

　　4. What is the difference between the reform of China Everbright Group and that of state-owned commercial banks?

　　There exist “one sameness and three differences”. We face the same reform objective with state-owned commercial banks, i.e. building a modern commercial banking system; in the meantime, we also encounter “three differences”: 1. Different contents. State-owned commercial banks need only one reform of the whole bank as they are whole legal entities in the same industry, while China Everbright Group involves multiple legal entities in different industries. It is like that state-owned commercial banks shoot one elephant with one shot while we are shooting ten foxes with ten shots. 2. Different “weapons”. State-owned commercial banks may accomplish the reform with the capital injection of the state, while we need the capital injection and also the agreement of a majority of shareholders under the joint stock system. 3. Different “shooting” environments. Compared with state-owned commercial banks, we also develop businesses in Hong Kong apart from the Mainland; therefore, the reform shall also give full consideration to the sound and steady development of Hong Kong businesses.

　　5. What is the focus in the reform of China Everbright Group in the current period?

　　The reform of China Everbright Group highlights the adherence to the scientific approach to development, the fulfillment of instructions made by the State Council, the persistence the “four focuses and one promotion” strategy, the promotion of work in four aspects and the advance in construction of five projects.

　　The “four focuses and one promotion” strategy includes: 1. focus on addressing the primary conflicts, properly handling the primary conflicts between reform and development which concerns the growth of China Everbright Group; 2. focus on seizing the historical opportunity, taking advantage of the hard-won historical opportunities created by the ascending economy and bull capital market; 3. focus on the development of key companies, highlighting the restructuring of China Everbright Bank during the course of reform, while giving consideration to the restructuring of other subsidiaries of the group; 4. focus on the enhancement of internal management to build strict rules and regulations and a sound internal control system. By devoting efforts to the “four focuses”, we shall promote the comprehensive development of the Group and consolidate our overall competitiveness and sustainable development capability.

　　The “work in four aspects” is: 1. boosting the reform of China Everbright Group and incorporating the first financial holding group company held by the state; 2. incorporating China Everbright Industrial Group Company with a view to boosting the sustainable development of industrial business; 3. completing the financial restructuring of China Everbright Bank, introducing international leading commercial banks as our strategic investors on the basis of qualified capital adequacy ratio, sound asset quality and sufficient provisions, and striving for completion of share offering and listing in the next year; 4. completing the share offering of China Everbright Securities, strengthening the operations management and promoting sound yet fast development of other companies.

　　In order to mobilize and coordinate various parties, the Group shall spare no effort in building the “Five Projects”, i.e. the project of reform, the project of management, the project of innovation, the project of cohesiveness and the project of talent, in the current period and the future, with an aim to pushing forward the sound development of the Group.

　　6. Please describe the development prospect of China Everbright Financial Holding Group Company?

　　Financial holding company is the mainstream comprehensive operation mode selected by financial industries of different countries, bearing the core characteristics such as centralized control rights, comprehensive operation, consolidated financial statements and dominating financial business. As an effective mode of comprehensive operation, financial holding companies boast the incomparable advantages in economy of scale, economy of scope, synergetic effect and reduction of industrial risks of a single operation.

　　China Everbright Group, with the first license of state-holding financial holding company, assumes the glorious mission of accumulating experience for the comprehensive operation and reform of China’s financial institutions. China Everbright Financial Holding Group Company has explicit development objectives, that is, building a standard corporate governance structure and risk control system in accordance with the requirement of modern financial enterprise system, setting down market position, transforming business mechanism, building a platform for comprehensive operation, enhancing core competitiveness and corporate performance, upgrading corporate market value and constructing a modern financial enterprise featured by adequate capital, strict internal control, secure operation, quality service and sound performance.

　　7. How does China Everbright Group ensure the stability of Hong Kong businesses during the reform?

　　The Hong Kong businesses of China Everbright Group will be strengthened rather than being weakened during the reform. The operations of China Everbright Group will continue to present outstanding performance and to contribute to the prosperity and stability of Hong Kong.

　　8. How do the large-scale non-performing assets of China Everbright Bank, a joint-stock commercial bank, occur?

　　 There are mainly two reasons: one is the huge non-performing assets arising due to historical reasons, such as takeover of the original investment banks, which is difficult to recover and dispose; the other is the non-performing loans arising due to the defects in our previous compliance culture and the problems in risk management.

　　9. What is the current NPL ratio of China Everbright Bank?

　　The NPL ratio of China Everbright Bank has seen declines for two successively years, dropping to the current level of less than 7%.

　　10. Is there any possibility that China Everbright Bank substantially increases its provisions?

　　Currently, China Everbright Bank sets aside provisions on the principle of prudence and strictness (As of the end of 2006, the Bank has set aside provisions of RMB17.9 billion, with the provision coverage ratio reaching up to 67.33%).

　　11. What measures will China Everbright Bank adopt to control the formation of new non-performing assets?

　　We shall push forward the construction of a comprehensive risk management system by devoting efforts to policy formulation, organization improvement, technology advancement, procedures rebuilding and culture cultivation, in order to prevent and eliminate the occurrence of new non-performing assets.

　　12. What implications do you think the restructuring will exert on China Everbright Bank?

　　The restructuring of China Everbright Bank under the guidance of the state, has significant implications to the supplementation of core capital, increase of capital adequacy ratio, addressing of historical connected transactions, enhancement of corporate governance structure, improvement of internal control mechanism as well as the promotion of sound business development.

　　13. Some small and medium shareholders mentioned during exchange with the Media that, they wish to know how China Everbright Bank would protect the minority interests in the reform.

　　We will pressingly protect the legitimate interests of small and medium shareholders in strict compliance with relevant laws and regulations as well as the provisions of the Bank’s Articles of Association. The early listing of China Everbright Bank after completion of financial restructuring may further increase the equity’ market value and better protect the interests of the shareholders.

　　14. Will the substantial dilution of shares owned by old shareholders affect shareholder’s value?

　　With increase in the total number of shares, old shareholders will enjoy increased equities though the shareholding proportion is reduced. Particularly, after the restructuring, the sustainable development of the Bank will bring forth substantial increase to shareholder’s value.

　　15. Why didn’t China Everbright Bank adopt the mode of extensive issuance in the restructuring?

　　A key task of the restructuring of China Everbright Bank is to address the over RMB7 billion-worth connected transactions resulted from historical reasons, which can only be realized with a state-dominated restructuring plan. Moreover, viewed from the timetable, China Everbright Bank cannot complete the restructuring in a short time if it does not adopt the state-dominated mode, which will put China Everbright Bank under serious shortage of capital, sanctions from regulatory authorities and even the crisis of survival.

　　16. How was the scale of capital injection in the restructuring determined?

　　It was mainly determined in consideration of the requirements on capital adequacy ratio.

　　17. How will you resolve the connected transactions between China Everbright Group and China Everbright Bank as well as the non-performing assets generated therefrom?

　　According to the commercial practice in debt restructuring, debts between China Everbright Group and China Everbright Bank will be disposed on the principle of “principal repayment with interest exemption”.

　　18. How will Huijin participate into the restructuring?

　　Huijin plans to inject capital to China Everbright Bank, with the scale and price of capital injection being subject to the deliberation and approval of the Board of Directors and the Shareholders’ General Meeting of China Everbright Bank.

　　19. What changes will take place on the management system of China Everbright Group and China Everbright Bank after the restructuring?

　　After the restructuring, China Everbright Group will be renamed as China Everbright Financial Holding Group Company, or “China Everbright Group” for short; and the management framework is featured by “Double Management and Double Concurrent Appointment”: leaders of China Everbright Group shall be put under the management of the Central Government and that of Everbright Industrial be put under the management of China Everbright Group; Chairman and Secretary of the CPC committee of China Everbright Group shall concurrently serve as Chairman and Secretary of the CPC committee of China Everbright Bank and the leaders of China Everbright Group shall concurrently take charge of Everbright Industrial.

　　20. Will there be any adjustment to the members of the Board of Directors after the restructuring?

　　This issue is under discussion at present, and specific adjustment matters have to go through relevant approval procedures and be subject to the deliberation of the Board of Directors and the Shareholders’ General Meeting.

　　21. When will China Everbright Bank distribute dividends?

　　In the past, China Everbright Bank could not distribute profits before the accumulated losses are made up in accordance with the law. Profit distribution shall be subject to the discussion of all the shareholders after the restructuring.

　　22. What is the capital introduction plan of China Everbright Bank in the future?

　　After completion of the financial restructuring, China Everbright Bank shall initiate the introduction of overseas strategic investors under the guidance of competent departments, with an aim to adjusting the equity structure, enhancing corporate governance and improving operations management.

　　23. What is the IPO plan of China Everbright Bank in the future?

　　With the favorable domestic and overseas capital markets at present, China Everbright Bank will strive to launch IPO as soon as possible after completion of the reform.

　　24. Facing the increasingly fierce market competition and the new trend of business transformation, has China Everbright Bank set down any new development plan for the future?

　　With the aim of building a top-notch bank, we will continue to consolidate our leading position in the advantageous business fields and strive for an advanced position in some selected businesses.

　　25. Facing the investors on the capital market, what do you think are the greatest advantages of China Everbright Bank?

　　To China Everbright Bank, the greatest advantage lies in the Group, i.e. China Everbright Financial Holding Group Company, which will be the first state-holding financial holding company and a pilot of the comprehensive operation amongst China-invested financial institutions.