Dec 31, 2015 — (“BOCI USA Holdings”), a holding company which acquired BOCI Commodities & Futures (U.S.A.) LLC. (“BOCI C&F”) and BOC International (
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1 Bank of China Limited U.S. Resolution Plan Public Section December 31, 2015 This document contains forward – looking statements. Statements that are not historical – looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. The forward – looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes. Forward – looking statements speak only as of the date they are m ade, and Bank of China undertakes no obligation to update publicly any of them in light of new information or future events.
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2 TABLE OF CONTENTS INTRODUCTION .. .. .. .. .. 3 O VERVIEW OF THE B ANK .. .. .. .. . 3 O VERVIEW OF THE B ANK S U.S. O PERATIONS .. .. .. .. 4 M ATERIAL C HANGES SINCE 2014 U.S. R ESOLUTION P LAN S UBMISSION .. .. .. 4 O VERVIEW OF THE R ESOLUTION P LAN .. .. .. 6 1. CORE BUSINESS LIN ES .. .. .. .. 6 2. CRITICAL OPERATIO NS .. .. .. . 6 3. MAT ERIAL ENTITIES .. .. .. 7 4. CONSOLIDATED FINA NCIAL INFORMATION RE GARDING ASSETS, LIAB ILITIES, CAPITAL AND MAJOR FUNDING SOURCES .. .. .. .. .. 8 C APITAL .. .. .. .. .. 9 M AJOR F UNDING S OURCES .. .. .. 10 5. DERIVATIVE ACTIVI TIES AND HEDGING ACT IVITIES .. .. 10 6. MEMBERSHIPS IN MA TERIAL PAYMENT, CLEA RING AND SETTLEMENT SYSTEMS . 10 7. FOREIGN OPERATION S .. .. .. .. 10 8. MATERIAL SUPERVIS ORY AUTHORITIES .. .. .. 12 H OME C OUNTRY A UTHORITIES .. .. .. .. 12 H OST C OUNTRY A UTHORITIES .. .. .. 12 9. P RINCIPAL OFFICERS .. .. .. .. 13 10. CORPORATE GOVERN ANCE STRUCTURE AND R ESOLUTION PLANNING P ROCESS .. 14 11. MATERIAL MANAGEM ENT INFORMATION SYST EMS .. .. .. 15 12. RESOLUTION STRAT EGY .. .. .. . 15
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3 INTRODUCTION of Governors of the Federal – Frank Wall Street Reform and – ). Section 165(d) and the Final Rule specify that any foreign bank that is treated as a bank holding Section 165(d) and the Final Rule. A Covered Company is required to periodically submit to the event of material financial distres s or failure. Bank maintains bra nch offices in the United States (described below), the Bank is treated as a bank holding company under Section 8(a) of the IBA. T he global total consolidated assets of the Bank, including its U.S. operations, exceeded $50 billion as of December 31, 201 4 . As a result, the Bank is a Covered Company and is required to file a U.S. Resolution Plan under Section 165(d) and the Final Rule . As required by the Final Rule, this document constitutes t U.S. Resolution Plan. Overview of the Bank Bank of China was formally established in February 1912. From 1912 to 1949, the Bank served specialized international trade bank. After the founding of PRC, the Bank became responsible for m anaging development and economic infrastructure through its offering of international trade settlement, overseas fund transfer and other non – tr ade foreign exchange servi ces. In 1994, the Bank transformed from a specialized foreign exchange bank into a state – owned commercial bank, and then incorporated as Bank of China Limited in August 2004. The Bank was listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange i n June and July 2006 respectively. The Bank provides a comprehensive range of financial services to customers across the Chinese mainland, Hong Kong, Macau, Taiwan and 41 overseas countries. It is one of the largest banking s most internationa l and diversified bank. As of December 31, 2014, the largest shareholder of the Bank was Central Huijin Investment Limited, an investment company owned by the Chinese Government. At that time, Central Huijin Investment Limited held 65.52 % of the Bank equity . personal banking and financial markets se rvices. As of December 31, 2014 , the Bank had total
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4 assets of over $ 2.4 9 trillion . T 2014 was approximately $ 66.6 billion . In 2012, 2013 , 201 4 and 2015 , the Bank was designated as a Global Systemically Important Bank – by the Financial Stability Board , becoming the sole financial institution from emerging economies to be designated as a G – SIB for four consecutive years . Overview of the U.S. Operations The Bank conducts its banking operations in the United States through five federally licensed branches: Bank of Chi na Los An , and The Bank has two branches located in New York, NY: the Midtown branch and the Queens branch. The Midtown Branch and the Queens Branch are two of the few remaining grandfathered FDIC – insured branches of foreign banks . For U . S . Resolution planning purposes, the Midtown Branch and the Queens Branch have been combined and are referred to as licensed by the CBSF and BOCLA are uninsured limited federally – licensed branches. BOCCH is an uninsured federally licensed branch. As of December 31, 2014 five U.S. branches had total assets o f approximately $74.1 billion . Material Changes since 2014 U.S. Resolution Plan Submission During the course of 2014 and through September 2015, certain organizational structure and to s senior management occurred . H owever, none of these changes resulted in any material changes overall business or organ izational structure since the 2014 U.S. Resolution Plan submission.
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5 The U . S . banking operations of the Bank as of December 31, 2014 are depicted below: Within the Bank 1 nonbanking entities domiciled in the United States: o Business: aircraft leasing; o Tota l assets as of December 31, 2014 : $2.0 1 billion o Business: i nvestment brokerage; o Tota l assets as of Dece mber 31, 2014 : $ 2.14 million o Business: commodities and futures brokerage; o Total assets as of D ecember 31, 2014 : $ 14.55 million 1 The list below does not include 7BP Owner LLC , an entity established November 2014 solely for the ownership and management of a commercial real estate building located at 7 Bryant Park, New York, NY (the entity took ownership of the building in May 2015); and BOC International (U . S . A . ) Holdings Inc. , a holding company which acqu ired BOCI Commodities & Futures (U . S . A . ) LLC . S . A . ) Inc. (“BOCI USA”) in 2015. These two entities are outside the scope of this 2015 Tailored 165(d) Resolution Plan because neither entity became operational until after December 31, 2014.
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6 Overview of the Resolution Plan Lines, Critical Operations, and Material Entities (each as defined in the Final Rule), if any, and the determination of whether any such Core Business Lines, Critical Operations, or Material Entities are within the scope of the requirements of the Final Rule. 1. CORE BUSINESS LIN ES Definition in the Final Rule as the business lines of the Covered Company which are conducted in whole or material part in the U.S., and the failure of which would result in a material loss of revenue, profit or franchise value to the Covered Company. Identification of Critical Operations For the purpose of this U.S. Resolution P lan, the Bank has identified three Core Business Line s in its U. S. operation Corporate Banking, Payment Settlement/ PSCS Treasury Services . Corporat e Banking comprises the vast majority of the U.S. operations and includes the following three businesses: Trade Finance, Corporate Loan s , and F inancial Institution Services . 2. CRITICAL OPERATIO NS Definition those operations of a Covered Company which are conducted in whole or material part in the U.S., including associated services, functions and support, the failure or discontinuance of which, would pose a threat to the s tability of the U.S. financial system . Identification of Core Business Lines For the purpose of this U.S. Resol u t ion Plan, under the Final Rule either the Bank or the FRB and the FDIC have the authority to jointly designate an operation of a Covered Comp any as a CO. The Bank conducted an analysis that resulted in the determination that the Bank does not have a CO. Additionally, the FRB and FDIC have not designated any operations that the Bank conducted in whole or material part in the U.S. as a CO . Thus , for purposes of this U.S. Resolution Plan, the Bank does not have any COs.
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8 4 . CONSOLIDATED FINANCI AL INFORMATION REGARDING ASSETS, LI ABILITIES, CAPITAL A ND MAJOR FUNDING SOURCE S Consolidate d Statemen t o f Financia l Position The following table summarizes the consolidated statement of financial position of the Bank as at December 31, 20 14 , presented in accordance with International Financial Reporting BO C Consolidated Fi nancials as of December 31, 2014 Assets ( in Renminbi million s ) Cash and balance due from banks and other financial institutions 813,054 Balances with central banks 2,306,088 Placements with and loans to banks and other financial institutions 402,280 Government certificates of indebtedness for bank notes issues 76,517 Precious metals 194,531 Financial assets at fair value through profit or loss 104,528 Derivative financial assets 47,967 Loans and advances to customers, net 8,294,744 Financial investments 2,605,847 Investment in associates and joint ventures 14,379 Property and equipment 172,197 Investment properties 18,657 Deferred income tax assets 25,043 Other assets 175,554 Total assets 15,251,382 Liabilities Due to banks and other financial institutions 1,780,247 Due to central banks 348,271 Bank notes in circulation 76,607 Placements from banks and other financial institutions 225,330 Derivate financial liabilities 40,734 Due to customers 10,885,223 Bonds issued 278,045 Other borrowings 30,447 Current tax liabilities 41,636 Retirement benefit obligations 4,566 Deferred income tax liabilities 4,287 Other liabilities 352,561
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9 BO C Consolidated Fi nancials as of December 31, 2014 Total liabilities 14,067,954 Equity Share capital 288,731 Other equity instruments 71,745 Capital reserve 130,797 Treasury shares (25) Other comprehensive income (13,671) Statutory reserves 96,105 General and regulatory reserves 159,341 Undistributed profits 407,836 Non – controlling interests 42,569 Total equity 1,183,428 Sou rce : Bank of China Limited 2014 Annual Report Capital The Bank utilizes a centralized model for capital, funding and liquidity management that ensures optimal global efficiency and control. BOCNY provides funding operations to U.S. branches and provides U.S. dollar funding based on business requirements to foreign branches and affiliates. It also manages the liquidity for other U.S. branches. The CBRC requires each bank or banking group to maintain a ratio of total regulatory capital to its risk – weighted assets at or above the agreed minimum of 8%, and a core capital ratio of above 4%. Th e table belo w summariz es th e capita l adequac y ratios a nd leverage ratio o f th e Bank a s a t December 31, 2014 . Th e Bank complied wit h th e externall y impose d capita l an d leverag e rati o requirement s t o whic h i t i s subject. A s a t 3 1 December 201 4 For the Bank : Capita l adequac y rati o [ 14.45 ] % Cor e capita l adequac y rati o [ 11.20 ] % Leverag e rati o [ 6. 18 ] % Th e capita l adequac y ratio s an d leverag e rati o abov e ar e calculate d i n accordanc e with th e rule s an d regulation s promulgate d b y th e CBR C an d generall y accepte d accounting principle s o f PR C
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10 Major Funding Sources BOCNY is self – funded under both normal and stress conditions. It provides funding to and manages liquidity for BOCLA and BOCCH. Additionally, BOCNY, designated as the U.S. dollar fundin and BOCNY arranges U.S. dollar funding for other overseas branches and Head Office on a case – by – case basis. BOCNY is mainly funded by deposits from various third parties in China as well as in the United States. Also, the Bank has a majority – owned Hong Kong – incorporated banking subsidiary, Nanyang , that has a branch in San Francisco (NCBSF) . NCBSF is mainly funded by wholesale deposits, and corporate customers in the United States as well as by its parent bank, NCB in Hong Kong . NCB . 5 . DERIVATIVE ACTIVITIE S AND HEDGING ACTIVI TIES BOCNY enters into various transactions involving derivatives and other off – balance sheet financial instruments . These financial instruments are mainly interest rate swaps and foreign exchange forwards. BOCNY uses these instruments to reduce its sensitivity to interest rate fluctuations. 6 . MEMBERSHIPS IN MAT ERIAL PAYMENT, CLEAR ING AND SETTLEMENT S YSTEMS U.S. banking operations utilize payment, clearing and settlement systems to support a variety of business functions. Some of the material payment, clearing and settlement systems in which the Bank is a member are listed below. Global Payment System (GPS) Funds transfer and payment processing system. SWIFT SAA Global financial payment and messaging service system by SWIFT . Clearing House Interbank Payments System U.S. dollar clearing house. Federal Reserve Wire U.S. dollar settlement system. 7 . FOREIGN OPERATIONS the Bank provides a comprehensive range of financial services to customers across the Chinese mainland, Hong Kong, Macau, Taiwan and 41 banking, personal banking and financial markets services. BOC International Holdings Limited, a China Group Insurance
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