2007-12-03

[Shenzhen, China] December 3, 2007

　　Shenzhen Development Bank (“SDB” or “the Bank”; SZSE 000001) announced today its Board resolution on a non-public share offering plan , which proposes to issue 120 million RMB ordinary shares to Baosteel Group Corporation (“Baosteel” or “the Investor”). The full text of that filing is available at www.cninfo.com.cn.

　　This press release, which is posted at www.sdb.com.cn, summarizes key aspects of the non-public share offering plan of SDB.

　　SDB is very pleased to announce this offering, in which Baosteel will become a strategic shareholder of the Bank. This investment will add significantly to the capital strength of the Bank, and help position it well for the future.

　　The subscription price will be 90% of the average price of the trading prices of the bank’s shares listed in Shenzhen Stock Exchange during the 20 trading days immediately before the announcement date of the resolutions adopted by the Bank’s board of directors. Based on the formula provided by the applicable law, the subscription price will be 35.15 yuan per share and the total proceeds are estimated to be 4.218 billion Yuan to supplement the capital of the Bank.

　　Baosteel will be a strategic investor in SDB, and according to applicable rules of non-public offering, shall not transfer any of the shares subscribed in this offering within 36 months after the issuance is completed. As part of the agreement, Baosteel will have the right to recommend one candidate for director to the SDB board of directors. The Board of Directors of SDB reviewed and approved the Offering Plan, and approved the Bank to sign the “Subscription Agreement”. The Offering Plan will be submitted to the Bank’s Shareholders’ Meeting for approval, and requires approval from China Securities Regulatory Commission and China Banking Regulatory Commission.

　　After the issuance is completed, the Bank’s largest shareholder, Newbridge Asia AIV III, L.P., will hold a somewhat reduced percentage in the Bank’s shareholding but will continue to be substantially the largest strategic shareholder of the Bank. If this share offering were computed in the total shares outstanding as of 2007/09/30, then the portion held by Newbridge Asia AIV III, L.P. would move from 16.7% to 15.8%. Newbridge fully supports for this plan to augment the capital of the Bank for the long-term strategic benefit of the Bank and all its shareholders.

　　The business of SDB has improved significantly during the past few years. The net profit of 2006 Full Year increased 319% over that of 2005. The net income of the first nine months of 2007 grew 93% over that of the same period of last year.

　　Through internal profit generation and effective balance sheet management, the Core Capital Ratio of the Bank at 2007/09/30 reached 4.28%, more than the 4% CCAR regulatory requirement for the first time ever since 2003. However, the Total Capital Ratio of the Bank is still below the regulatory requirement.

　　The successful implementation of this offering is estimated to bring to the Bank RMB 4.218 billion Yuan core capital and will significantly further improve the Bank’s capital position. In addition, the equity increase will also improve the net book value of the Bank. Based on the net assets at 2007/09/30, without considering the impact of exercise of call warrants and the increase of net profit, after the offering, the net book value per share will rise to 5.70 Yuan from 4.01 Yuan at 2007/09/30.

　　Besides this offering, the Bank has developed and is implementing other steps to improve its capital strength. Currently, the call warrants issued during the Bank’s share reform have started being exercised for the tranche with 6 months lifetime, expiring on December 28, 2007. If fully exercised, this block of warrants can bring in approximately 3.9 billion Yuan core capital to the Bank. Considering the full impact of that warrant exercise and its own capital-generation, after completion of the investment by Baosteel, the CAR of the Bank is expected to achieve the 8% regulatory requirement. The Bank can then be qualified to apply to open new branches in new cities as well as develop other innovative business opportunities.

　　In addition to core capital plans, the Bank has actively sought alternatives of improving tier 2 capital. The Shareholders’ Meeting of the Bank already approved issuance of up to 8 billion subordinated debt and up to 8 billion hybrid capital. The increase in equity of the Bank, combined with the previously announced planned issuance of Tier 2 capital, should raise the bank’s total CAR well in excess of regulatory requirement.

　　SDB welcomes Baosteel as a strategic shareholder. Baosteel is the leading steel enterprise in domestic China and has adopted a strategy of diversification in businesses such as trading and finance. In a listing of the Top 500 manufacturers in China, the National Bureau of Statistics named Baosteel Group as No. 1 in principal business revenue. According to the July 2007 edition of “Fortune” magazine, Baosteel was listed as No. 6 among all the steel companies in the Global 500 Company List. The subscription of SDB shares is a strategic investment by Baosteel and will be very helpful for the Bank to further enhance its capital strength, further develop innovative business opportunities, improve competitiveness, and achieve overall development in a long term and healthy manner.

About SDB

　　Shenzhen Development Bank, the first joint-stock owned company to list on the Shenzhen Stock Exchange (SZSE 000001), is a national bank headquartered in Shenzhen, with RMB 340.5 billion yuan in assets as of 2007/09/30. SDB provides a broad range of services to commercial, retail, financial, and government customers, through 252 branches and sub-branches in 18 major cities across China. 16.7% of the Bank’s shares are owned by Newbridge Asia AIV III, L.P.

About Baosteel

　　Baosteel Group Corporation (hereinafter refers to “Baosteel”) is the state-authorized investment institution and state-controlling company permitted by the State Council. The registration capital is 49,478,571,000 Yuan. The legal person representative is Mr. Xu Lejiang.

　　Baosteel is the most modernized, technically advanced, and largest steel-making base of first-class product, and the R&D base of new techniques, new technology, and new material for the steel industry. It is one of the most advanced steal-making companies in the world. The products of Baosteel include the three major steel-making fields, i.e. carbon steel, stainless steel, and special steel. At present, Baosteel is the largest manufacturing base of high quality products such as the ship and pipe steel, electric steel, special metal material, special seamless pipe for petroleum and electric power industry, and new type construction steel, etc.

In 2006, Baosteel produced 22.53mm tons of steel and realized 180.681bn Yuan consolidated sales revenue and 12.933bn Yuan consolidated net profit. It ranks as No. 307 among the Global 500 Companies. In October 2007, the Standard & Poor's rated the long-term credit grade of Baosteel as “A-”, with “positive” prospect.