LA MUERTE EN UN HOSPITAL Y SENTIMIENTOS CONEXOS

In 2013, focusing on the central tasks of the Bank, the Board of Supervisors fully implemented regulatory requirements, emphasised the Bank’s working priorities and pursued practical results. It earnestly carried out the supervision of duty performance, fi nances, internal controls and risk management, pushed forward the planning and implementation of major decisions and continuously enhanced the effi ciency of its supervision of the Bank’s corporate governance, strategy implementation, operational management, risk management and internal control, so as to safeguard the interests of shareholders and the Bank.

Carry out supervision and evaluation on the duty performance of directors and senior management members. The Board of Supervisors attended meetings of the Board of Directors, special committees and the senior management as non-voting attendees and supervised the compliance level of major decision-making processes in line with regulatory guidelines and requirements. By collecting, sorting and analysing important information including meetings, keynote speeches, instructions and the meeting minutes of directors and senior management members on a monthly basis, the Board of Supervisors maintained an in-depth understanding of how major matters are being implemented across the Bank, including the Bank’s development strategy, business plan, capital and risk management and internal audit. It also strengthened the supervision of the duty performance process of directors and senior management members.

In addition, the Board of Supervisors formulated an annual evaluation plan for duty performance and diligently organised annual duty performance interviews with directors and senior management members. It also exchanged views on the progress and effectiveness of major tasks as well as on relevant opinions and recommendations, objectively and fairly evaluated the duty performance of the Board of

Directors, the senior management and their members, and developed annual evaluation opinions on duty performance, so as to urge directors and senior management members to perform their duties with diligence.

Increase the pertinence and accuracy of fi nancial, internal controls and risk management supervision.

The Board of Supervisors collected information on the fi nances, risks and internal controls of the Bank and other banks by attending meetings of the Board of Directors, special committees and the Executive Committee and other means and analysed the information on a monthly basis. It carried out more targeted supervision of the Bank’s fi nances, risks, and internal controls by strengthening comprehensive and forward-looking judgment and focusing on key issues.

First, it enhanced supervision of material fi nancial matters. The Board of Supervisors held four special meetings with relevant departments of the Head Offi ce with regard to the compilation, review and disclosure of the periodic fi nancial reports. It also heard reports on fi nancial report compilation, material fi nancial matters, mechanisms building for risk assets variations and risk management, and reports on major internal audit fi ndings, paying special attention to the implementation of 2013 annual business plan and fi nancial budget, the applicability and accuracy of accounting policies, legality and compliance of major fi nancial decisions and effectiveness of risk management and internal controls. The relevant department actively responded to opinions and suggestions in a timely manner by the Board of Supervisors and made continuous improvements.

Second, it reinforced supervision on external audit quality. As there were changes in the external auditors of the Bank, the Board of Supervisors enhanced communications with auditors and urged

them to become familiar with the Bank’s operation and fi nancial position as soon as possible. It heard audit plans and reports on audit opinions on three occasions, and required external auditors to further improve audit quality and make more valuable audit suggestions.

Third, it deepened supervision of internal controls and risk management. To effectively carry out supervision of internal controls, the Board of Supervisors regularly summarised and analysed supervision opinions, major problems found in internal and external audits and corrective actions taken, followed up the compliance of CARPALs indicators regulated by CBRC, and constantly tracked the progress and effectiveness of key risk management and internal control tasks. The Board of Supervisors also paid close attention to the dynamics of industrial and regional credit risks such as those in overcapacity industries, real estate, and local government fi nancing vehicles, as well as interbank business, liquidity risks and IT progress. In addition, it reminded and urged the senior management to step up response and prevention measures, with the underlying aim of “no systemic or regional risk occurred”.

Carry out special surveys on core issues and actively provide constructive recommendations. The Board of Supervisors continued to conduct special surveys as an important means of its duty performance.

Its survey team visited 22 domestic and overseas branches and subsidiaries to carry out research on important operational management issues at the basic level based on actual conditions. Supervisors actively provided pertinent opinions and suggestions in the meetings of the Board of Directors and the senior management based on the survey results, making helpful references to better decisions and implementations. In response to the opportunities and challenges brought about by RMB internationalisation,

interest rate liberalisation and the spread of mobile internet, the Board of Supervisors brought its strengths into play to support the strategic goal of

“Serving Society, Delivering Excellence”. It focused on the key issues of improving outlet effi ciency, developing internal dynamics and improving management of the Bank’s off-balance sheet wealth management business. It learnt comprehensively about actual frontline conditions by carrying out special surveys on departments of the Head Offi ce, branches and subsidiaries, extensively collected the wisdom and demands of all stakeholders, thus enhancing the scope and intensity of its supervision activities. The Board of Supervisors ensured a timely exchange of views with relevant departments and branches regarding prominent problems identifi ed in surveys, submitted survey reports and supervision proposals to the senior management, and helped to refi ne policies and measures and develop approaches to improvement so as to build an excellent bank.

Implement regulatory guidance to strengthen self-building. The CBRC issued the Guidance on the Work of the Board of Supervisors of Commercial Banks and the Guidance on Corporate Governance of Commercial Banks, specifying the direction and route of corporate governance for commercial banks and providing guidelines for the work of the Board of Supervisors. The Board of Supervisors paid close attention to the guidelines and steadily implemented them through various measures, which includes:

formulating measures for implementing supervision on fi nances and internal controls, and revising measures for the duty performance evaluation of directors and senior management members as well as working rules of special committees; adjusting the terms of services

of supervisors, including electing three shareholder supervisors and one employee supervisor; carrying out annual evaluation of supervisors after formulating measures for evaluating their duty performance, and improving incentive and restraint mechanisms; holding trainings sessions with special surveys as case studies, concerning supervisors’ duty performance, and arranging for supervisors to attend CBRC’s training sessions for directors and supervisors of large banks, so as to enhance the quality and capability of duty performance; organising and participating in the 2013 seminar for boards of supervisors of controlling and participating banks hosted by Huijin reaching broad consensus and achieving positive results by exchanging views with substantial shareholders, regulators and peers’ boards of supervisors on how to fully play the rule of board of supervisors under new circumstances and how to actively prevent systematic risks. The Offi ce of Board of Supervisors also gave full play to its role of consultancy and service guarantee, and further improved its working effi ciency and executive capability.

The work of the Board of Supervisors was well recognised and supported by the Board of Directors and the senior management in 2013. The Board of Supervisors fully realised its role as an effective check and balance within the Bank’s structure, which further enhanced the Bank’s corporate governance capacity.

During the reporting period, the Board of Supervisors held no objections to such matters under its supervision as the Bank’s operational and legal compliance, fi nancial position, use of capital raised, purchase and sale of assets, connected transactions and internal controls.

Material Litigation, Arbitration and Issues of