China Construction Bank Corporation Holds the Annual Business Performance & Board of Directors Meeting in Tianjin

Working Together to Seek Development

From April 25 to 26, 2005, the 7th meeting of the 1st Board of Directors of China Construction Bank Corporation (hereinafter referred to as the “corporation”) & the 2004 Annual Business Performance Meeting was held in Tianjin. All the directors of the corporation attended the meeting and all of its supervisors, secretary of the Board of Directors (BOD) and representatives of the regulatory authorities and the intermediary agencies were present at the meeting.

According to the Corporate Law and the Articles of Association of the corporation, the meeting deliberated the corporation’s 2004 financial statement and the plan of profit distribution, the 2005 operational master plan and budget plan, the 2004 annual report and the work report of the Board of Directors since its establishment and discussed the work plans for assessing the internal control system and strengthening the related-party transaction control.

Chairman Guo Shuqing hosted the meeting and delivered the BOD work report in which he reviewed the achievements of the BOD in improving corporate governance structure and accelerating corporate reform since its establishment. As required by related laws, regulations and the corporation’s Articles of Association, the BOD faithfully fulfills its duties, sets up five special committees of strategy & nomination, auditing, risk management, remuneration & performance evaluation and related-party transaction control and defines the functions and working procedures of each of them. It drafts and revises a series of corporate governance systems including the corporation’s Articles of Association, the BOD’s Rules of Procedure and the Working Procedures of the President. It works hard to push for the establishment of new corporate governance structure and examine the corporation’s development strategies and major reform schemes including the organizational restructuring. It accelerates the transformation of the corporation’s operational mechanism, improves internal control, reinforces basic management and standardized operation, pushes forward the shareholding reform and effectively uses new governance mechanism.

The report objectively analyzes where the BOD should make improvements since its establishment. The BOD is fairly young and lacks experiences and deep understanding of the new governance structure. As a decision-making body, it is still in the initial stage of performing its functions and should reinforce the coordination, collaboration and contact system with the senior management and keep properly positioning its functions.

The report defines the priorities of the BOD this year as follows: guided by the scientific concept of development, as required by the modern enterprise system, the BOD should further improve the corporate governance structure; focusing on transferring the operational mechanism, each special committee should direct and supervise the institutional construction and various reforms; the development strategies should be implemented comprehensively and the risk management and internal control system development should be strengthened; research should be conducted to establish the accountability system of senior executives with focus on asset quality; product and service innovation should be sped up and efforts be made to ensure the fulfillment of the operational objectives; IPO should be pushed forward; the BOD should build its own capacity and improve efficiency.

In line with the corporation’s development strategies and taking into account market competition, the current operational and managerial performance and the requirement of the regulators, the meeting carefully reviews the annual operational plan and the financial budget plan submitted by the senior management. In the attitude of being responsible for the shareholders, the corporation, the employees and the public, the meeting cuts about 15% of the capital expenditure for 2005. It also requires considering the impact of the state macro control upon the business performance of the corporation when formulating the operational plan and taking effective measures to control the market and credit risks. Referring to the requirements recently raised by the China Banking Regulatory Commission (CBRC) of strengthening risk control, the meeting carefully discusses the development of the risk management and internal control systems, raises the requirement that the development of various risk management and internal control systems throughout the corporation should be accelerated and the governance efficiency be improved.

In the process of deliberations the directors, in a serious attitude, discussed heatedly, spoke out their opinions freely and raised many constructive ideas and suggestions. They reviewed the achievements in a down-to-earth manner, analyzed problems in a targeted way and prioritized objectives properly.

At the meeting the senior management reported the performance of the corporation in the first quarter of 2005. Highly recognizing the performance of the senior management since the establishment of the corporation, the BOD pointes out that the senior management has been able to adapt to new systems and mechanisms effectively, performed its duties faithfully and made its due efforts in pushing the establishment of the corporation, implementing the development strategies, reforming the management systems, strengthening risk control, raising asset quality, promoting business innovation and improving business performance. The BOD extends gratitude to the senior management for its hard work and contributions to the development of the corporation!

During the two-day meeting, the special committees of risk management and auditing and the independent directors Song Fengming, Yashiro Masamoto and Xie Xiaoyan even hold separate meetings at night, discussing the major problems of reform and risk management faced by the corporation. Being highly responsible and with a strong sense of mission, they raised many suggestions and opinions on improving the corporation’s product and service innovation capacities, launching special improvement projects and raising its risk control ability. The directors, at tea break or at night, actively communicate with the senior management to discuss the mechanism of coordination, collaboration and contact between the BOD and the senior management, which enabled them to increase understanding and common consensus and jointly seek how to grow the corporation big and strong.

In 2005 the China Construction Bank Corporation faces both the heavy workload of reform and development and multiple opportunities and challenges. The BOD notes that it will work with the Board of Supervisors and the senior management to seriously implement the requirements of the central government on the shareholding transformation of state-owned commercial banks, observe related rules and regulations, perform their functions faithfully, work hard to fulfill this year’s tasks and accelerate reform and development.