SDB Announcement on Assets Acquisition and RPT Restructuring Pre-plan Acquiring PAB Shares via NPO to PAG


[SZ, China] September, 2nd ,2010 18:00

  Shenzhen Development Bank(“SDB”, SZSE Stock Symbol 000001) files the Announcement to SZSE today that SDB BoD has approved the Pre-plan of SDB Assets Acquisition and RPT Restructuring(this Restructuring Pre-plan) on September 1st and agrees the Bank to sign the conditional Share Subscription Agreement with Ping An Insurance (Group) Company of China,LTD ( PAG), where PAG uses about 7.825 bn PAB shares( approximately 90.75% of PAB share total) and consideration cash to subscribe approximately 1.639 bn shares of the Bank via non public offering (NPO) at price of 17.75 Yuan per share (this Transaction). The preliminary appraised value of PAB onJune.30th,2010 as the benchmark date was RMB 29.1 bn. The above mentioned consideration cash and NPO volume are calculated based on the preliminary appraisal value. The subscription volume of this NPO is subject to the final PAB pricing after the relevant appraisal is done as well as CSRC approval. The deal is also major asset restructuring for PAG, meanwhile PAG announces that the Group BoD has approved this Restructuring Pre-plan related with this deal.

  The Bank will call the BoD Meeting to review other pending items after the appraisal is done and then submit the transaction to Shareholder Meeting for approval. The Bank will submit it to the regulators for review and complete the deal upon approval.

  In addition, in order to fulfill regulatory requirement of integrating two banks, the Bank agreed that, in consideration of the progress of the merger deal and the agreement reached with all related stakeholders after earlier stage communications, SDB will bring “the integration of both banks” into reality with approaches allowed by laws and regulations, including but limited to absorption and merger of PAB. Meanwhile Ping An Group agrees to offer necessary supports to facilitate SDB to realize aforementioned integration.

  Full text of the Announcement and relevant documents are available at www. and www.

Endeavor to achieve win-win for all parties in the Transaction

  After the Bank completed non public offering to PA Life on June 2010, PAG and the affiliated party improved SDB’s shareholding to 1.045 bn shares or 29.99% of total. To avoid potential competition and meet CBRC requirement, PAG
  promises to urgently kick off SDB-PAB merger in line with relevant Laws and Regulations, fulfill necessary internal decision-making procedures and deliver to the regulators for approval so that the merger can be done within one year.

  According to pre-appraisal value of PAB, the final price or the total subscription price of this deal is about 29.1 billion Yuan. SDB will issue about 1.639 bn shares via NPO on 17.75 Yuan/share basis to PAG. In light of the preliminary appraisal value of PAB as 29.1 bn Yuan, the consideration obtained consists of a) 7,825,181,106 shares of PAB held by PAG ( approximately.90.75% of PAB share total, 8,622,824,478 shares) and b) cash consideration, namely total subscription price minus asset consideration.

  After the transaction is done, SDB total shares are expected to be about 5.124 bn shares where PAG and the affiliated parties will become the dominant shareholder, with over 50% shareholding. PAG’s SDB shares via NPO are forbidden to transfer within 36 months after the Share Subscription is done.

  The preliminary appraised value of PAB at June 30th, 2010 as the benchmark date is RMB 29.1 bn Yuan. The final pricing will be based on the net book value (NBV) of PAB on pricing benchmark date appraised by Asset Appraisal Agency while incorporating PAB’s profitability and growth capacity etc Therefore SDB and PAG will together confirm PAB’s overall value.

  SDB share price in this NPO is the average of 20 transaction days prior to pricing benchmark date (BoD Resolution announcement date of first BoD meeting held by the Bank regarding this deal), i.e. 17.75 Yuan/share.

  After the Transaction is approved by the Bank BoD, the Bank will prepare Major Assets Restructuring and RPT Report and Abstract and disclose after the relevant appraisal/profit forecast are done. The Bank will then call the BoD Meeting to review other pending items and submit to SH Meeting for approval. The relevant Proposals will be delivered to regulators for approval. Then it will implement upon regulatory approval.

  This deal is an integral part of “both bank integration”. In order to further proceed with “both bank integration”, Ping An Group and SDB agreed that, in consideration of the progress of the merger deal and the agreement reached with all related stakeholders after earlier stage communications, SDB will bring “the integration of both banks” into reality with approaches allowed by laws and regulations, including but without limited to absorption and merger of PAB.

  According to SDB, the Transaction Proposal design and approval process are strictly in line with the relevant Regulations and Laws, principles of corporate governance while properly incorporating and balancing the interests of those stakeholders. After PAG investment, PAB has achieved huge progress in terms of asset strength, outlet distribution, volume growth, specialized businesses and asset quality in recent years. This deal will further build the Bank’s position, enhance competitiveness and sustainable development capability based on both banks’ respective strengths .

Integrate and step into a new height
  After the deal, SDB will further fulfill regulatory requirement of integrating two banks The customers would directly benefit from the more convenient distribution of outlets/self-service facilities as well as the wider range of products. Also, the integrated bank would be expected to step into a new stage in respect of rapid and steady development, customer service and internal management.

  The bank demonstrates that in the future, the merged bank would accelerate the pace of development, focus on leveraging the strength in terms of SME and consumer finance to rapidly improve market share and future pursue excellence and higher standards in respect of service, product, staff, operation, compliance, internal control and risk management in a bid to gradually achieve scale effect and generate favorable returns for shareholders on a continued basis.

  The execution of this deal will bring closer strategic partnership between the bank and PAG as well as subsidiaries of PAG. The future development focuses will be placed on leveraging the strong resources advantage provided by China PA, including more than 51mm individual customers and 2mm Corporate customers, to enhance the width and depth of cross-selling, consolidate customer base and service scope and achieve better synergies. In addition, the integrated bank can also fully utilize and share the strength in respect of operation system and management resources so as to improve the comprehensive ability of integrated financial service through innovative and professional means and channels.


About SDB
  Shenzhen Development Bank is the first Joint-stock company listed in SZSE (SZSE 000001) as well as a nationwide bank headquartered in SZ. As of June 30, 2010, total assets attained to 624.4 bn Yuan. SDB has 303 outlets located in 20 leading cities across the county and thereby provides diversified financial services to the customer base in area of corporate, retail and governmental departments. At present, Ping An Group of Chinatogether with its connected subsidiaries jointly hold 1.045bil shares of SDB, representing 29.99% of total equities of SDB..
  Key items as of 2010 June 30 balance sheet:
  - Total deposits:506.0 bn Yuan
  - Total loans:373.6 bn Yuan
  - Total assets:624.4 bn Yuan

About Ping An Group of China
  Ping An Insurance (Group) of China Co., Ltd. (hereinafter referred to as “Ping An Group of China”, “The Company” or “The Group”) as the first JS insurance enterprise in China, was borne in Shekou of Shenzhen in 1988, which has been developed into an integrated and pluralism-based integrated financial service group incorporating insurance, banking and investment. The Company was listed in both HKSE and SHSE, and the stock codes are 2318 and 601318 respectively.

  China PA utilizes the multiple-channel distribution networks of subsidiaries of business units hereunder to provide personalized & comprehensive financial products and services (including insurance, banking and investment etc) to 5 mm more retail customers and 2mm corporate customers with the unified brand.

  China PA possesses around 417,000 Life agents and 83,000 permanent employees as well as more than 3800 branch institutions and marketing service departments at all levels. As at June 30, 2010, the Group’s total assets reached 1032.9 bn Yuan. Net Assets reached 109.9 bn Yuan. In 1H 2010, the group’s realized total revenue attained to 96.98 bn Yuan and net profit was 9.866 bn Yuan. Measured from insurance business revenue, PA Life is the second largest life company in China and PA P & C is the second largest property and casualty company in China.

About PAB
  PAB is an important member under the umbrella of PAG as well as an important element of China PA’s integrated financial platform. By June 30, 2010, the bank’s total assets exceeded 230.6bn Yuan; the head office is based on Shenzhen and the outlets are distributed across Shenzhen, Shanghai, Fuzhou, Quanzhou, Xiamen, Hangzhou, Guangzhou, Dongguan and Huizhou etc.

  China PA’s banking business originates from Fujian Asian Bank acquired in 2003 followed by the acquisition of Shenzhen Commercial Bank in 2006 and PAB comes from such two banks’ merger by absorption. China PA holds 90.75% shares of PAB.

  PAB financial performance as of June 30 2010
  - Net profit in the half year from Jan. to June: 912 mm (audited net profit for the full year 2009 reached 1.105 bn Yuan)
  - Net assets: 15.3 bnl Yuan
  - Total assets: 230.6 bn Yuan