Bank of China and RBS Sign Strategic Investment and Cooperation Agreement

Bank of China announced today that it had a signed strategic investment and cooperation agreement on August 18th with the Royal Bank of Scotland Group (hereinafter RBS ). Pursuant to the agreement, RBS will lead an acquisition of a 10% interest in Bank of China for a total consideration of US$3.1 billion. This transaction is subject to government and other relevant regulatory approvals.

Bank of China is the most internationalized and one of the largest Chinese commercial banks. RBS is Europe s second largest, and the world s sixth largest banking group by market capitalization. The signing of the investment and cooperation agreement brings together two prestigious financial institutions with complementary business strengths, and is in line with the long-term business strategies and development goals of both parties.

As a key component of the strategic cooperation, the two parties will enter into broad cooperation in a range of areas including credit cards, wealth management, corporate banking and personal lines of insurance.

In addition, the two banks intend to establish a close cooperative relationship in major banking managerial areas, including corporate governance, risk management, financial management, human resources management and information technology. RBS will also appoint a representative to serve on the board of directors of Bank of China.

Xiao Gang, Chairman of Bank of China, said:

I am delighted that an investment agreement has been reached with RBS.With its experienced management, outstanding business strengths, well-established internal control mechanisms and prudent management style, RBS is an ideal partner. The cooperation with RBS is a key step in our joint stock reform, and is crucial to transforming the operational structure, enhancing the internal management, improving the competitiveness and promoting our profitability.

Wang Jianxi, Vice Chairman of Central SAFE Investments Limited, the major shareholder of Bank of China, said,

Bringing in international strategic investors is an important step in the deepening of the reform of state-owned commercial banks in China. Through strategic cooperation with RBS, Bank of China will be able to further enhance its corporate governance and internal control. We are confident that the strategic cooperation between Bank of China and RBS will produce positive results for both parties.

Sir George Mathewson, Chairman of RBS, said:

The RBS Board believes that the size and growth of China represents an important opportunity. We have been developing our relationship with Bank of China over the last 18 months, and have been impressed by the strengths of the business and its compatibility with RBS. The combination of Bank of China s brand, distribution and customer base with RBS s product and operational strengths and experience will be powerful in the Chinese market. We are excited by the potential of this partnership and look forward to working together to realise it.