Regulatorycompliance

CHINA

Capital Largestcity Currency Language Population GDPNominal

Purchasepowerparity Realgrowthrate

LombardRiskbusinessandregulatory complianceexpertsexplain:

Government Legislature Geographicalarea Economy

Beijing Shanghai Renminbi StandardChinese 1,339,724,852 $7.298trillion $11.299trillion 9.2%(2012) MarxistLeninistsinglepartystate NationalPeoplesCongress 3,704,427miles2 nd 2 largest|Largestexporterofgoods nd intheworld|2 largestimporter| Fastestgrowingeconomy(butslowing) |Lowcostproduction 3.6[10good0bad]/75th Worldshighestpopulation|Largest standingarmy|2ndlargestcountryland area;apublicsuperpower|Expected toleadtheworldeconomyby2050| Exponential/uncontrolledgrowthhas severelyimpactedChinasresources andenvironment.Benefitsofeconomic developmenthasnotbeendistributed evenly,resultinginawidedevelopment gapbetweenurbanandruralareas

regulatoryenvironment inChina
Banksregulators
TheChinaBankingRegulatoryCommission(CBRC): TheCBRCwascreatedbytheStateCouncilofPRCin responsetoswellingdebtloads,undercapitalization andnontransparentbusinesspractices;itisthe countrysprimarybankregulatorsince2003. ThePeoplesBankofChina(PBC):ThePBCisthe centralbankofthePRC.Itcontrols,formulates,and implementsmonetarypolicy;consolidatesfinancial statisticsfromreportsintheindustryandproduces economicanalysisandforecast;issuesRenminbi (currency)andadministersitscirculation. TheStateAdministrationofForeignExchange(SAFE): TheSAFEisanadministrativeagencyunderthePBC, whichdraftsrulesandregulationsregardingforeign exchangemarketactivities;monitorsrisk,balanceof paymentandexternalcreditanddebt;development andsupervisionoftheforeignexchangemarket, reservesandassets. TheirroleistoregulatethebankingsectorofthePRC(Peoples RepublicofChina). Generally,datesforBaselIIIimplementationstartattheendof 2013,withdifferentdatesaccordingtowhethertheinstitutionis systematicallyimportantornot.Systematicallyimportantbanks haveuntiltheendof2013,whereasotherbankshavetilltheend of2016toimplementBaselIII,loanprovisionratioandleverage ratiosupervision.

Corruption perceptionrating/ worldwideranking Pointsofinterest

Investmentfirmsregulator
TheChinaSecuritiesRegulatoryCommission(CSRC): Thenationsfirstcomprehensivesecuritieslegislation grantedtheCSRCauthoritytoimplementa centralisedandunifiedregulationofthenationwide securitiesmarketinordertoensuretheirlawful operations. LikeSAFE,theCSRCisanagencyofthePRC.Chinese firmsdominatetheprivateequitylandscapedueto foreignfirmsfacingmorestrictregulatoryandfunding challengesthandomesticfirmslikeBeijingbasedHony Capital.

hasasignificant business presenceinChina,havingcarriedout businessintheregionformanyyears.Our professionalservicesresourcesliaisewith thelocalbankingcommunityandare engagedinimplementingarangeof LombardRiskservicesandproduct, includingfullyautomatedregulatory reporting. LombardRiskREPORTERforregulatory compliance

Insurancefirmsregulator
TheChinaInsuranceRegulatoryCommission(CIRC): AuthorisedbythePRC,CIRCregulatestheChinese insuranceproductsandservicesmarketandmaintains legalandstableoperationsintheindustry. TheCIRCplanstoimplementthesecondphaseofitsown solvencyregulation(equivalentofSolvencyII)by2017.

Regulatorycompliance

GDPgrowth(%)ofChinaandcomparisons

20 15 10 5 0
09 10 06 02 03 04 05 07 20 20 20 20 20 20 20 20 20 20 20

China US UK World
08 01 11

TheregulatoryobjectiveoftheCBRCisto: Protecttheinterestofdepositorsandconsumers throughprudentialandeffectivesupervision Maintainmarketconfidencethroughprudentialand effectivesupervision Enhancepublicknowledgeofmodernfinancethrough customereducationandinformationdisclosure Combatfinancialcrime ThesupervisoryandregulatorycriteriaoftheCBRCareto: Promotethefinancialstabilityandfacilitatefinancial innovationatthesametime Enhancetheinternationalcompetitivenessofthe Chinesebankingsector Setappropriatesupervisoryandregulatory boundariesandrefrainfromunnecessarycontrols Encouragefairandorderlycompetition Clearlydefinetheaccountabilityofboththe supervisorandthesupervisedinstitutions Employsupervisoryresourcesinanefficientandcost effectivemanner

10

Bankcomposition

ExamplebankreturnsrequiredbytheCBRC

Return G01 G01Z

Name
/ Balancesheet / Loan qualityreport / Provisionofasset / Liquidityratiostatement / Basicstatementforforeign banks / P&L / Credit statementIII:top10clientloanlist / CreditstatementII:top10ofinterbankplacementlist / Credit statementI:top10ofgrouploanlist / Top20of relatedpartytransactionstatement / Liquiditygap /Top10ofdepositclient /Top10ofinterbank taken /Foreignexchangeriskexposure statement / Capitalratiostatement / Onbalancesheetweighted riskassetscalculationtable / Offbalancesheetweighted riskassetscalculationtable / Loanmovements

ChinaBankingRegulatoryCommission

G03 G22 S24 G04 G14

Current chairman Previous chairman Address Website

ShangFulin LiuMingkang(2011) JiaNO.15FinancialStreet,Xicheng District,Beijing,100140 http://www.cbrc.gov.cn/english/in dex.html G14 G14 G15 G21 G23 G24 G32 G41 G42 G43 G12

TheCBRCwasestablishedin2003tooverseethebankingsectoras anindependent,ministrylevelsupervisoryofficethatreports directlytothestatecouncil.CBRCislargelycomposedofbank supervisiondepartmentsthatpreviouslyreportedtothePBC. TheCBRCrequiresreportssuchas: Balancesheet,P&Lreporting Capitaladequacy,liquidity,interestrate,large exposuresreporting Derivativesandsecuritiesreporting

Regulatorycompliance
ExamplebankreturnsrequiredbythePBC

Return B01 B02 B03 B06 B04 B05 B07 B09 B08

Name
/Balancesheet /P&L /Otherfinancialdata /Statementofloan (Classificationinthesizeofthecorporateclients) /Depositreservemonthlyreport /P&L (14 ) /Financial marketmonitoringandstatisticmonthlyreport(14 spreadsheets) - /CNYincomingand outgoingpaymentsquarterlyreport(9reports) /ForeignbankCNYincomingand outgoingpaymentsstatisticreport

LombardRisksREPORTERkeepspacewithregulatory requirements,automatingendtoendfromdatacollectionto electronicoutput,sogivingyoutheidealsolutionforall automatedregulatoryreportingrequirements. Withfullsupportforkeysupervisorycomputationsand powerfulworkflow,statusdashboards,graphicalpresentation oftrendsandvalidations,REPORTERdelivershugesavingsin timeandeffort,reducesoperationalrisk,anddelivers significantlyimprovedmanagementinformationand managementoversight. BaselIII,EBA/EuropeancommonreportingCOREP andFINREPandtransactionreporting,aswellas SolvencyIIfortheinsurancemarketplace Regulatorycomputationfromrawdatawith comprehensiveCapital,LiquidityandLargeExposures enginesaswellasdetailedstatisticalcomputations Automationofregulatormandatedandclient definedvalidationrules Supportforalltransmissionrequirementsincluding XBRL,XMLandproprietaryformats Powerfuldatamanagementfunctionalityovercomes TheDataProblem:fullyautomatedcleansing, consolidationandnormalisationofmultipledata sourcesirrespectiveofdataformat AutomatedStraightThroughProcessing(STP) enablesexceptionbasedmanagement,ensuring regulatoryreportingisautomatedunlessmanual interventionisneeded Workflowautomationjobstreamsyourproduction processenablingsignoffdependenciestobe achievedunderstricttimetableconditions Fullsecurityforallprocesses TrendsandVarianceanalysisprovidesautomated drilldowncomparisontools,significantlyaccelerating review,reconciliationandsignoff.Regulators enquiriesareanticipatedandeasilyanswered

ExamplebankreturnsrequiredbySAFE

Return F01 F03 F02

Name
/FCYloanmovementreport /CNYloan coveredbyFCYguarantee /Loanscoveredby overseasguaranteeandguaranteeclaims

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August2012