[Shenzhen, China] 18:00 May 25, 2010
Shenzhen Development Bank (“SDB”; SZSE 000001) today filed an announcement with the Shenzhen Stock Exchange that the Board of Directors approved the nomination to shareholders for election of 8 new directors and the resignation of some current directors. The Bank also announced Board appointment of some key new members of senior management. The full text of the Board announcement is available at www.sdb.com.cn or www.cninfo.com.cn.
The board of SDB announced that Chairman and CEO Frank Newman has decided that, now that the bank has reached this stage of development and success, and has a new major shareholder, it is time for the bank to elect a new top leadership, to lead the bank in its next steps of progress. Therefore he resigned his positions as chairman, as director, and as CEO, effective upon the Bank’s receipt of CBRC’s approval of the appointment of his successors. The board announced that Mr. Newman will then serve as Senior Advisor to the Bank until the end of 2010. Mr. Xiao Suining, currently the Bank’s President, resigned as the President, effective upon the Bank’s receipt of CBRC’s qualification approval of the new President, and was elected to be the new Chairman of the Board of Directors, subject to CBRC approval. Mr. Richard Jackson was elected to be the Bank’s new President, subject to CBRC approval, and an executive director of the Board, subject to the shareholders’ meeting and CBRC approval.
The board and Mr. Newman have agreed that he will consult for the bank from time to time, as Senior Advisor, during the remaining time from the effective date through December, which is last month of the term for the seventh board. The board expressed its sincere appreciation on behalf of all the directors, the senior management, staff, and the shareholders for Mr. Newman's leadership during these past five years, during which the bank has made extraordinary progress. The Board noted that under his leadership, SDB has grown from a troubled bank more than 5 years ago into a bank with solid profitability supported by competitive advantages in key business aspects, a strong and professional team that conducts business with high integrity and professionalism, and very good asset quality, to provide sustainable growth foundation for the future. China Ping An Insurance ( Group) Co., Ltd ( PAG or China PA) leadership also expressed their respect and appreciation for the accomplishments of Mr. Newman and the whole team at SDB, and PA looks forward to helping the now strong and successful bank to reach even greater heights. The board and PA are pleased that Mr. Newman will be available to provide advice, based on his extensive experience, during this important transition period.
Three directors from Newbridge, Mr. Dan Carroll, Ms. Mary Ma, and Mr. Ricky Lau, submitted to the Board their resignations of the director positions, effective as of 12 PM on May 25. Mr. Liu Baorui submitted to the Board his resignation of the Director position of the SDB Board, due to bank restructure reason, effective on May 23. Mr Liu continues in his senior management leadership role as VP responsible for Retail Banking. Ms. Chen Wei, previously Standing VP and Executive Director of Ping An Bank, was approved to be Vice President and CFO of SDB, subject to CBRC approval, and an executive director of the Board, subject to shareholders’ meeting and CBRC approval. Mr. Wang Bomin’s title was approved to be Chief of Finance and Accounting, effective upon receipt of CBRC’s qualification approval of the new CFO. The Board expressed its respect and appreciation for the continuing professional contributions of Mr Liu and Mr Wang, during this period of change for the bank.
The Board waived the relevant clauses in the Share Subscription Agreement with Ping An Life regarding time requirement of directors recommendation and approved for presentation for election to the shareholders at the AGM to be held on June 17, 6 directors recommended by Ping An Insurance (Group) Company of China, Ltd. (PAG) and PAL. Mdm Wang Liping, Executive Director and Deputy GM of PAG; Mr. Jason Yao Bao, Executive Director, DGM, CFO of PAG; , Mr. David Ku, DGM of PAG, Chairman/ CEO of Ping An Data (Shenzhen) Co., Ltd; Dr. Lo Sai Lai, DGM of PAG, Chairman and Chief Executive Officer of Ping An Technology Co., Ltd and Mdm. So Lan Yip, Assistant GM and Chief Audit Officer of PAG were nominated by the SDB Board to be directors, subject to shareholders’ meeting and CBRC approval. Mr. Liu Nanyuan, Vice-chairman, Shenzhen Municipal Domestic Banking Association, was approved to be elected as an independent director of the Board, subject to shareholders’ meeting and CBRC approval. All directors nominated will serve until mid December 2010, as is applicable to other current directors.
The Board also thanks Newbridge directors for their professional contributions to the Board and strong support to the Bank during their term. And，the Board thanks Newbridge as the largest shareholder in the past more than 5 years, for initiating and promoting the substantial improvements in the Bank during this critical time.
The Board welcomes the joining of the new directors, and welcomes Mr. Richard Jackson as the Bank’s new President, and Ms Chen Wei as VP & CFO. Mr. Jackson brings to the bank more than 25 years of highly professional banking experience. He served in a range of senior positions with Citibank, in several countries, and then led the significant progress of PAB over the past 3 years, as its president. Ms Chen Wei is an experienced banker having many years of management. The Board looks forward to their contributions to the Bank and the Board.
Mr. Frank Newman expressed his appreciation to various government agencies, and regulators including CBRC, CSRC and PBC for their support and guidance, and expressed appreciation to all shareholders including Newbridge who initiated the transformation of the Bank. Mr. Newman especially thanks the Board for providing world-class professionalism and in-depth guidance and stated it has been an honor to work with such an excellent board. Mr. Newman expressed special thanks to the whole SDB team for their hard and smart work over the years and his pride to work with the increasingly strong team of SDB to realize the great achievements of the Bank. He expects the Bank would attain new heights in the future with the strong addition to the management team and the Board. Mr. Newman expressed high confidence in Mr. Jackson as the new president, and looks forward to continuing progress for the bank under his leadership. He stressed his pride in the SDB team, confidence in the future of the bank and the new leadership at the bank, and expectation that the relationship between the bank & PAG will lead to greater success for the bank.
A TPG (Newbridge) spokesman stated: “We are very pleased to have had the opportunity to make a contribution to the transformation and development of SDB. In the past five years, SDB has been transformed from a weak bank to a healthy and strong bank. TPG wishes to take this opportunity to thank, in particular, the city government of Shenzhen, CBRC, CSRC and other regulators for their support and guidance over the years, thank the board of directors and the board of supervisors of SDB for their leadership and diligent work and thank the entire management team and all the staff of SDB under the leadership of Chairman Frank Newman for their efforts and very effective performance. We also thank all the shareholders of SDB for working with us in the past years. We believe that PAG is one of the most outstanding financial enterprises in China, with standardized and transparent corporate governance, far-sighted strategy, matured integrated financial development model, and excellent management team. We firmly believe with its scale, network and excellent management, Ping An will boost SDB as if adding wings to a tiger. We wish SDB success in its efforts to deepen its business relationship with its vast customer base and go to the next level.”
In the past over five years, SDB achieved substantial progress in business performance and realized many successes in various aspects. The total deposits at 1Q 2010 are 2.8 times that of the start of 2005, loans were 3.0 times and equity was 5.1 times that at the start of 2005. The NPL ratio declined from 11.41% to 0.63%, a very low level in the industry; the Provision Coverage Ratio was improved from 35.5% to 187.5%, and the Capital Adequacy Ratio was improved from 2.3% to 8.66%. In 2009, the full year net profit was more than 5 bn Yuan,14.8 times as much as that of 2004, with an annual compound growth rate of 72%. In the first quarter of 2010, the Bank announced that it recorded further growth, with the net profit up by 41% over 1Q 2009 to 1,578 mm Yuan.
This substantial performance improvement of the Bank was achieved with support of the governments and regulators, and with the trust by customers, shareholders, and the public. The Bank did not depend on any government funding support to complete the transformation and reform. Now, SDB’s trade finance and retail business both stand out in the industry. The Supply Chain Finance, credit card, SME service, auto finance, and wealth management businesses have developed well with continuously improving earning capacity. At present, SDB operates with more than 300 outlets in 20 hub cities in China. The Bank has developed into a national commercial bank providing all-around and high quality financial services for customers.
In accordance with the Share Subscription Agreement entered between SDB and PAL on June 12 2009, the Bank plans to issue no less than 370 million and up to 585 million new RMB ordinary shares to PAL through non public offering (“Offering”). On May 5 2010, SDB made an announcement that the Bank has received the CBRC reply with agreement on NPO and the shareholder qualification for PAL and the Offering is now subject to the approval of other applicable regulatory authority. It is expected that after the offering total outstanding shares of the Bank will increase from 3,105 mm to between 3,475 to 3,690 mm shares. The subscription price will be 18.26 Yuan per share and the total proceeds will be between 6.7 and 10.7 billion Yuan. After completion of the Offering, the Bank estimates it will improve CCAR to over 7% and CAR to over 10%.
SDB and the new strategic investor PAG hope to proceed with the share offering quickly in the next step, in order to consolidate capital, provide business development opportunities, and provide further opportunities for staff. The Bank plans to realize a smooth transition and achieve long term healthy growth.
With the increase of capital base, the Bank will expedite outlet opening in other major cities, and embrace more business growth opportunities to bring solid return to shareholders. In addition, in the future, there is substantial cooperation opportunity between SDB and PAG with its subsidiaries in aspects including sharing best business practice, expanding customer service scope thus promoting sales capacity, and fully utilizing the highly efficient operation and technical platform. The two parties will gradually progress with concrete business cooperation plans.
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 619.9 billion Yuan in total assets as of March 31 2010. SDB provides a broad range of services to commercial, retail, and government customers, through 303 branches and sub-branches in 20 major cities across China. At present, 21.44% of the Bank’s shares are owned by Ping An Insurance (Group) Company of China, Ltd.
Key items of balance sheet as of Mar 31, 2010
Total deposits: 467.6 bn Yuan
Total loans：372.0 bn Yuan
Total assets: 619.9 bn Yuan