7.2.1 Bank of China Background
As the oldest bank and one of four largest banks in China, Bank of China (hereafter the Bank) was founded in 1912. After the founding of the People’s Republic of China, with a long history in acting as the state-designated specialist foreign exchange bank, the Bank became China’s important window to the world and the key foreign exchange financing channel. In 1994, the Bank transformed from a specialized foreign exchange bank into a state-owned commercial bank. The Bank began a joint stock restructuring in 2003, which resulted in it being listed on the Hong Kong Stock Exchange in June and Shanghai Stock Exchange in July 2006 respectively, becoming the first Chinese commercial bank to launch an A-share and H-share and achieve a dual-listing in both markets. By amounting assets of approximately RMB 12.68 trillion, operating a network consisting of 11,277 domestic and overseas branches in 36 countries and districts with nearly 300,000 employees, the Bank has been listed in the Fortune Global 500 for 24 consecutive years. It became the only bank from an emerging economy being enrolled as a Global Systemically Important Financial Institution (G-SIFI) for two consecutive years (Bank of China’s Annual Report, 2012).
7.2.2 Corporate Governance of Bank of China
Since the restructure of the Bank in 2003, in compliance with the People’s Republic of China (PRC) Company Law, PRC Commercial Banking Law and regulatory requirements promulgated by regulatory authorities and based on its actual experience, the Bank promoted sound corporate governance and the improvement of its corporate governance framework as a modern joint-stock company, which is composed of the Shareholders' Meeting, the Board of Directors, the Board of Supervisors, and the Audit Committee, and Senior Management. The posts of chairman and president are assumed by two persons, to avoid undue concentration of power. By following the responsibilities set forth in the Articles, all parties functioned independently in compliance with the relevant laws and exercised their rights and obligations respectively.
In 2006, after the Bank listed its shares in the Hong Kong market, the Bank adopted measures to enable it to observe the Code on Corporate Governance Practices (the Code) as set out in Appendix 14 of the Hong Kong Listing Rules. The Bank has complied with the Code provisions and most of the recommended best practices set out in the Code. The Bank also observes the laws and regulations, as well as the various provisions and guidelines of the local regulatory authorities where it has business operations. PricewaterhouseCoopers became the international independent auditor for the Bank, and PricewaterhouseCoopers Zhong Tian CPAs Limited Company is the domestic auditor. Followed by the Code, the Bank of China also adopts international accounting standards, having Hong Kong directors’ presence. Currently, the board of directors comprises 14 members. There are three executive directors, five non-executive directors and six independent directors. A board of supervisors with eight members is also in place for overseeing the Bank’s financial activities, internal control and the legality and compliance of the board of directors, as well as the senior management and its members in performing their duties. In 2012, the Bank received several corporate governance rewards from different organizations.