China Merchants Securities : ANNOUNCEMENT ON CONTINUING CONNECTED TRANSACTIONS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

招 商 銀 行 股 份 有 限 公 司

CHINA MERCHANTS BANK CO., LTD.

(A joint stock company incorporated in the People's Republic of China with limited liability)

(H Share Stock Code: 03968)

(Preference Share Stock Code: 04614)

ANNOUNCEMENT ON CONTINUING CONNECTED TRANSACTIONS

The Company and CMFM entered into the Fund Business Co-operation Agreement on 3 December 2019 for a term of three years commencing on 1 January 2020 and ending on 31 December 2022.

Pursuant to the Fund Business Co-operation Agreement, one or more of the applicable percentage ratios (other than the profit ratio) in relation to the annual cap of the fees for investment fund sales and other services payable by CMFM Group from 2020 to 2022 are more than 0.1% but less than 5%, the transactions under the Fund Business Co-operation Agreement will accordingly constitute non-exempt continuing connected transactions of the Company which are subject to the reporting, annual review and announcement requirements, but are exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

INTRODUCTION

The fund business co-operation agreement entered into between the Company and CMFM on 13 December 2016 will expire on 31 December 2019. To ensure the Group's continual provision of investment fund sales and other services to CMFM Group after expiry of the agreement, the Company, as approved by the Board, entered into the Fund Business Co-operation Agreement with CMFM on 3 December 2019 for a term of three years commencing on 1 January 2020 and ending on 31 December 2022.

RELATIONSHIP BETWEEN THE PARTIES

As at the date of this announcement, CMFM is held as to 55% equity interest by the Company and 45% equity interest by CM Securities. CMFM is a non-wholly owned subsidiary of the Company.

As at the date of this announcement, CM Steam Navigation is a substantial shareholder of the Company; CM Group directly holds 100% equity interest in CM Steam Navigation and indirectly holds 29.97% equity interest in the Company (including the shares of the Company held through equity interest/controlling interest/parties acting in concert); CM Group also holds 44.09% equity interest in CM Securities which makes CM Securities an associate of the connected person of the Company under the Hong Kong Listing Rules. Accordingly, CMFM is a connected subsidiary of the Company and the transactions between the Group and CMFM Group constitute continuing connected transactions of the Company under Chapter 14A of the Hong Kong Listing Rules.

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FUND BUSINESS CO-OPERATION AGREEMENT

Principal terms of the Fund Business Co-operation Agreement are as follows:

Date:	3 December 2019
Parties:	(a)	CMFM; and
	(b)	the Company
Term:	From 1 January 2020 to 31 December 2022 (both days inclusive)
Description of transaction:	The Group will conduct sales and agency business relating to
	different types of investment products and/or funds and other
	businesses under the management of CMFM Group in accordance
	with the Laws on Funds of the People's Republic of China(《中
	華人民共和國基金法》), Management Rules on Public Offering
	Securities Investment and Fund Management(《公開募集證券投資
	基金運作管理辦法》), Management Rules on Sales of Securities
	Investment Funds(《證券投資基金銷售管理辦法》), the relevant
	fund offering documents and offering prospectuses. Members of
	the Group may enter into separate implementation agreements
	with CMFM Group for each specific investment product of
	CMFM Group. The terms of such implementation agreements will
	be governed by the Fund Business Co-operation Agreement and as
	such will not constitute new categories of connected transactions.
Pricing principles:	The fees for investment fund sales and other services payable by
	CMFM Group will be on an arm's length basis and calculated on
	normal commercial terms, having regard to the fees and charges
	specified in the fund offering documents and/or the offering
	prospectuses. The fees for investment fund sales and other
	services shall be at rate(s) standardised by CMFM Group and no
	less favourable than those charged to the independent third parties
	by the Group in the ordinary and usual course of business.
Payment terms:	Payments of the service fees will be settled in arrears by way
	of cash transfer, or such other manners as agreed by the parties
	and in accordance with the agreed timing and manners in the
	implementation agreements to be entered into between the Group
	and CMFM Group from time to time.

The transactions contemplated under the Fund Business Co-operation Agreement will be conducted on a non-exclusive basis. The Company will conduct enquiries in which the Company will seek quotations from at least two fund providers, or make reference to several other contemporaneous transactions with independent third parties for products and services to determine if the price and terms offered by CMFM Group are fair and reasonable and comparable to the price charged by and terms offered by such independent third parties.

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HISTORICAL AMOUNTS AND PROPOSED ANNUAL CAPS AND BASIS OF DETERMINATION

On 13 December 2016, the Board considered and approved the annual caps for continuing connected transactions entered into between the Company and CMFM for a term of three years from 2017 to 2019, which were RMB2,500 million, RMB3,800 million and RMB5,800 million, respectively. For the two years ended 31 December 2018 and the nine months ended 30 September 2019, the fees for investment fund sales and other services paid to the Company by CMFM Group were RMB1,406 million, RMB1,333 million and RMB784 million (unaudited), respectively. In light of the above, the Company proposes to set the annual caps in respect of fees for investment fund sales and other services payable by CMFM Group from 2020 to 2022 at RMB1,400 million, RMB1,600 million and RMB1,800 million, respectively.

In determining the annual caps of the service fees for the transactions under the Fund Business Co-operation Agreement, the Company has taken into account a number of factors, including the activities under the Fund Business Co-operation Agreement which may be affected due to a number of external reasons (including the unexpected fluctuations of the financial markets, customers' general decision on their wealth management portfolio, the current and projected operating conditions for the continuing connected transactions between the Group and CMFM Group which are not within the Company's control), with reference to the prevailing market conditions, the underlying transaction volumes and the expected growth in service fees. Taking into account that the growth in the fees for investment fund sales and other services is market-driven in nature which is difficult for the Company to estimate, and in order to allow more room for further increase of the transaction amounts between the Group and CMFM Group, the Board believes that it is reasonable to set the annual caps for 2020 to 2022 at RMB1,400 million, RMB1,600 million and RMB1,800 million, respectively.

REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS

CMFM is the first sino-foreign joint venture fund management company established under the CSRC's approval, providing various kinds of mutual funds and investment products. It has to-date established its own brand name and occupied a considerable share in the market.

As at the date of this announcement, CMFM is held as to 55% equity interest by the Company and is a non-wholly owned subsidiary of the Company. The increase in the fees for investment fund sales and other services and hence the growth in CMFM Group will generate higher returns for all the shareholders of the Company as a whole.

BOARD CONFIRMATION

The Board (including the independent non-executive Directors of the Company) considers that the Fund Business Co-operation Agreement was entered into: (i) in the ordinary and usual course of business of the Company; (ii) on normal commercial terms (in accordance with the terms on arm's length negotiation and on terms no less favourable than the terms offered by the Company to independent third parties); and (iii) that the terms and the proposed annual caps were fair and reasonable and were in the interests of the Company and its shareholders as a whole.

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Pursuant to Rule 14A.68(8) of the Hong Kong Listing Rules, Mr. Li Jianhong, Mr. Fu Gangfeng, Mr. Zhou Song, Mr. Hong Xiaoyuan, Mr. Zhang Jian and Ms. Su Min (all being Directors connected with CM Group), Ms. Su Min and Mr. Wang Daxiong (both being directors of CM Securities) had withdrawn from voting on the board resolution on the continuing connected transactions in view of their positions as connected directors. The relevant resolution was voted and approved by Directors who are not connected to the transactions.

IMPLICATIONS UNDER HONG KONG LISTING RULES

Pursuant to the Fund Business Co-operation Agreement, one or more of the applicable percentage ratios (other than the profit ratio) in relation to the annual cap of the fees for investment fund sales and other services payable by CMFM Group from 2020 to 2022 are more than 0.1% but less than 5%, the transactions under the Fund Business Co-operation Agreement will accordingly constitute non-exempt continuing connected transactions of the Company which are subject to the reporting, annual review and announcement requirements, but are exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

GENERAL INFORMATION RELATING TO THE COMPANY AND CMFM

The Company is a joint stock company incorporated in the PRC with limited liability, the A Shares and the H Shares of which are listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange respectively. The Group provides customers with various wholesale and retail banking products and services, and maintains treasury businesses with proprietary purpose and on behalf of customers.

CMFM was the first sino-foreign joint venture fund management company established under the CSRC's approval. CMFM was established on 27 December 2002 with a registered capital of RMB1.31 billion. The principal businesses of CMFM Group include fund establishment, fund management and other operations approved by CSRC.

DEFINITIONS

"associate(s)"

"Board"

"CM Group"

"CM Securities"

"CM Steam Navigation"

"CMFM"

"CMFM Group"

has the meaning ascribed to it under the Hong Kong Listing Rules;

the board of Directors of the Company;

China Merchants Group Limited 招商局集團有限公司;

China Merchants Securities Co., Ltd. 招商證券股份有限公司; China Merchants Steam Navigation Co., Ltd. 招商局輪船有限公

司, a substantial shareholder of the Company;

China Merchants Fund Management Company Limited 招商基金 管理有限公司;

CMFM and its subsidiaries (for the purpose of this announcement, including their respective associates);

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"Company"

"connected person"

"CSRC"

"Director(s)"

"Fund Business Co-operation Agreement"

"Group"

"Hong Kong"

"Hong Kong Listing Rules"

"PRC" or "China"

"RMB"

"Hong Kong Stock Exchange"

"subsidiary(ies)"

3 December 2019

China Merchants Bank Co., Ltd. 招商銀行股份有限公司;

has the meaning ascribed to it under the Hong Kong Listing Rules;

China Securities Regulatory Commission;

the director(s), including the independent non-executive directors, of the Company;

the fund business co-operation agreement entered into between the Company and CMFM on 3 December 2019;

the Company and its subsidiaries (for the purpose of this announcement only, excluding CMFM Group);

the Hong Kong Special Administrative Region of the People's Republic of China;

the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;

the People's Republic of China;

Renminbi, the lawful currency of the PRC;

The Stock Exchange of Hong Kong Limited; and

has the meaning ascribed to it under the Hong Kong Listing Rules.

The Board of Directors of

China Merchants Bank Co., Ltd.

As at the date of this announcement, the executive directors of the Company are Tian Huiyu, Liu Jianjun and Wang Liang; the non-executive directors of the Company are Li Jianhong, Fu Gangfeng, Zhou Song, Hong Xiaoyuan, Zhang Jian, Su Min, Wang Daxiong and Luo Sheng; and the independent non-executive directors of the Company are Leung Kam Chung, Antony, Zhao Jun, Wong See Hong, Li Menggang, Liu Qiao and Tian Hongqi.

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