Laws of the People's Republic of China

Reply of the People's Bank of China Concerning Issuing Financial Securities by China Merchants Bank

Yin Fu [2005] No. 75

The China Merchants Bank:

We have received your Request for Instructions on Issuing Financial Securities by China Merchants Bank (Zhao Yin Fa [2005] No. 434). In accordance with the Provisions on Issuing Financial Securities in the Nationwide Inter-bank Securities Market (Zhong Guo Ren Min Yin Hang Ling [2005] No. 1, hereinafter referred to as the Management Measures), we hereby reply as follows:

1.

We approve you\ to issue 15 billion Yuan of financial securities in the nationwide inter-bank securities market. 10 billion Yuan shall be issued in the first period, of which, 5 billion Yuan is of 3-year term and 5 billion Yuan is of 5-year term. The issuance of all financial securities shall be concluded before June 30, 2006.

2.

In line with the relevant provisions of the Management Measures, your Bank shall file the relevant documents with the People's Bank for archival within 5 workdays before the issuance of financial securities of each period and shall do a good job in the security issuance of each period as well as the relevant information disclosure according to the requirements of the People's Bank of China.

3.

Your Bank shall report the security issuance to the People's Bank of China within 10 workdays as of the date of the conclusion of each period of financial security issuance.

4.

After your financial security issuance is concluded, the securities shall, in accordance with the relevant provisions of the People's Bank of China, be allowed to circulate and be traded in the nationwide inter-bank securities market.

The People's Bank of China

October 9, 2005