The continued associated transactions that the Company carries out with Sinopec
Group are necessary for the Company’s continuous operations, and are also helpful
for its business operation and growth. For the trade with Sinopec Group, the Company
needs Sinopec Financial Institutions to serve as its platforms for clearing and
settlement both at home and abroad, while Sinopec Finance is the platform for internal
settlement, financing and fund management of Sinopec Group. Therefore, by realizing
internal settlement and centralized fund management through Sinopec Finance, the
Company can gain benefits, including shortening the time required for transfer and
turnover of funds, and improving the settlement efficiency. In addition, the Company
is enabled to obtain a capital pool to meet its capital requirements in a flexible
manner.
Sinopec Finance generally can offer the Company more favourable terms and interest
rates as compared to other financial institutions or banks. Under normal circumstances,
the deposit interest rate offered by Sinopec Finance will be no lower than that
offered by commercial banks for the deposits of the same nature and the same maturity,
and the loan interest rate will be no higher than that offered by commercial banks
for the loans of the same nature and the same maturity. At the same time, familiar
with the Company’s business, Sinopec Finance can provide flexible, convenient and
low-cost service to the Company at any time, and it will be difficult for independent
commercial banks to provide equivalent services.
Sinopec Finance is a non-banking financial institution under the same supervision
of the PBOC and CBIRC as commercial banks. The Company may, at its sole discretion,
deposit its funds into or withdraw them from Sinopec Finance without any restrictions,
and may, at its sole discretion, deposit such funds into Sinopec Finance or commercial
banks at any time in light of market conditions. Meanwhile the Company has the right
to withdraw its undue deposits in Sinopec Finance without being fined.