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Introduction

1.Date of Establishment

Cosmos Bank (“the Bank”) obtained the incorporation approval on August 13, 1991 and acquired its license on January 14, 1992. The Bank commenced its business officially on February 12, 1992. Since its inception, the Bank has been positioning itself to provide excellent financial services to corporate clients and the general public as a commercial bank.
In a bid to improve long-term competitiveness, Cosmos Bank approved on February 10, 2014 a share-swap scheme to make the Bank a subsidiary of China Development Financial Holding Corporation (CDF). The Bank officially became a CDF subsidiary on September 15, 2014 before being renamed KGI Bank starting January 2015. CDF is the only financial holding company in Taiwan that is focusing on industrial financing and securities business. The capital-rich company also owns CDIB Capital and KGI Securities, both long-time leaders in the local and overseas investment banking and capital markets. The acquisition of KGI Bank will help integrate CDF’s resources and competitiveness of financial services, thus creating a more competitive and internationalized financial service platform to enable long-term growth for all employees, clients and shareholders of KGI Bank.

2. Corporate History

A. The Bank foreclosed the Tainan Fourth Credit Cooperative Union, Miaoli Credit Cooperative Union, and Hsinchu Fifth Credit Cooperative Union on April 13, 1998, August 13, 2001, and July 28, 2003 respectively and merged with the Cosmos Bills Finance Corp. on October 31, 2002.

B. The Bank launched the George & Mary Cash Card in 1999.

C. The Bank issued the first EMV (Europay, MasterCard, Visa) chip credit card by co-branding with Living Mall of Core Pacific City in 2001.

D. The Auto Lending Machines (ALMs) were located island-wide in 2004 to offer faster and more convenient service channels to customers.

E. The Bank entered into an equity subscription agreement with GE Consumer Finance on January 23, 2006 and completed strategic recapitalization on June 8, 2006. Meanwhile, GE Group delegated directors and senior managers to Cosmos Bank, opening a new chapter of the Bank in joint management with a foreign investor.

F. In 2007, the Bank launched the MoneyBack Platinum Credit Card that offers cash rebates and special discounts at major department stores in Taiwan.

G. On December 28, 2007, the Bank completed a recapitalization exercise for about NT$42 billion. SAC Private Capital Group (S.A.C. PCG) became the biggest shareholder. GE Capital also participated in this capital increase. SAC and GE together account for more than 80% equity in total. Injected with capital and a large variety of world-class resources from these two major shareholders, the Bank introduced its new management team and board members who have expertise and management experience endowed with global visions. The Bank has implemented the “Turnaround Plan” in every aspect to improve corporate governance, enhance business performance and catalyze growth and transformation. This Plan has explored a brand new business opportunity for the Bank.

H. In 2008, the Bank introduced the MoneyBack Signature Credit Card which combines several privileged offers with cash rebates.

I. The Bank realigned its branch channels in 2009 with the goal of enhancing business performance.

J. To improve its financial structure, the Bank initiated a project in 2009 to strengthen equity capital. The Bank issued common shares by private placement, converted part of its mandatory convertible bonds and all its preferred shares into common shares. Following the above-stated approaches to increasing funds, the Bank then reduced its capital to appropriate part of the accumulated losses. The paid-in capital after completion was NT$16.23 billion.

K. The Bank adopted a new corporate identity system (CIS) on April 8, 2010. Our new CIS concept derives from the idea of “Initiating wealth accumulation from the heart.” The new CIS is shaped with both square and circled with 3D joints to symbolize our determination to begin a new way of thinking. The initials of Cosmos Bank “C” and “B” create the shapes of a heart and a “Yuan-bao” (sycee). Furthermore, the water channel in the middle symbolizes the relentless flows of wealth and manifests our mission to offer more valuable and innovative financial services and to create more financial advantages for our customers with the goal of creating a whole new win-win situation.

L. The Bank carried out the LEAN Project in August 2010 to eliminate activities that can no longer add customer value and to improve operational efficiency through a streamlined operating process.

M. The Bank undertook reorganization in 2011 to highlight each department’s functions and enhance business performance.

N. The customer-focused “Cosmos Banking Center” located in Chengdong Branch was officially opened to public on February 17, 2011. It offers a complete range of financial products covering deposit and remittance, consumer banking, corporate banking, wealth management and mortgage as well as instant services such as “Express Loans.” Under the professional directions by our “Professional Service Managers,” customers can obtain immediate solutions to their problems and demands.

O. On December 7, 2011, the Bank launched the “Cosmos Mobile Payment X-Card” and is the first bank officially approved by the Financial Supervisory Commission to deliver mobile payment services. XATM transfer and fee payment functions were added in 2012 to offer customers a safer and faster payment option.

P. In October 2012, the Bank co-branded with MILK Magazine, Rose House and ezfly to roll out the Macaroon Credit Card embedded with EasyCard functions. By collaborating with multiple brands, the Bank aims to facilitate exchanges between brand followers and maximize card rewards and discount offers so as to create a 3-win situation for card holders, participating brands and the Bank.

Q. The “subordinated unsecured mandatory convertible bonds” issued on December 28, 2007 has all been converted to common stocks in a total of 1,230,254 thousand shares on December 27, 2012. The face value is NT$10 per share and the shares total NT$12,302,541thousand.

R. To strengthen the Bank’s financial structure and offset accumulated losses, the first extraordinary stockholders’ meeting in 2012 approved to reduce capital by 46.54%. The actual paid-in capital after the capital reduction amounts to NT$15.256 billion.

S.In a bid to improve long-term competitiveness, Cosmos Bank approved on February 10, 2014 a share-swap scheme to make the Bank a subsidiary of China Development Financial Holding Corporation (CDF). The Bank officially became a CDF subsidiary on September 15, 2014

T. The Bank was renamed KGI Bank starting January, 2015.