Ernst & Young Apologizes for Misleading China Report

The Nonperforming Loan (NPL) Report that was issued on 3 May 2006 reported that the NPL exposure for China was estimated at US$911 billion. Throughout the report this amount was identified as a potential future amount that includes NPLs totaling approximately US$358 billion for the big four commercial banks. Upon further research, Ernst & Young Global finds that this number cannot be supported, and believes it to be factually erroneous.

The NPL Report did not go through our normal internal review and approval process before it was released to the public and, as it contains errors, we are withdrawing the report.

The official level of NPLs of US$133 billion for the big four commercial banks in China is computed on a regulatory and accounting standard based on objective evidence of impairment. Ernst & Young China serves as auditors for one of those four commercial banks and their audit, performed under international standards of auditing in order to form an opinion on the bank?s state of affairs in accordance with International Financial Reporting Standards, supports the bank?s contribution to the total of US$133 billion for all four of the commercial banks.

We apologize that this erroneous report was issued. We sincerely regret any misleading views that the report conveyed.