Senior officials from China's financial regulatory authorities have expressed
their support for cooperation between banks and insurance companies.
As the transitional period of the World Trade Organization (WTO) expires at
the end of the year, many Chinese commercial banks have felt the need for mixed
operations, said Tang Shuangning, vice-chairman of the China Banking Regulatory
Commission (CBRC).
Wu Dingfu, chairman of the China Insurance Regulatory Commission (CIRC), also
said recently that the CIRC supports insurers investing in bank shares. "The
CIRC is also ready to receive applications from banks to set up insurance
firms," he said.
China's financial regulatory rules, which took effect in 1995, currently ban
banks from engaging in the insurance business, and vice versa.
But under its agreement with the WTO, China is expected to open fully its
financial markets to foreign competitors at the end of 2006.
As most of the leading international financial groups are engaged in banking,
securities and insurance concurrently, lifting the restrictions on their
operation would make the 10-year-old law irrelevant.
According to Tang, major Chinese banks, including the Industrial and
Commercial Bank of China, the Bank of China, the China Construction Bank, the
Agricultural Bank of China and the China Communications Bank, have expressed
their intentions to set up their own insurance companies.
CIRC figures show that Chinese insurers have become major investors in the
country's stock market, investing as much as 49.9 billion yuan (6.3 billion U.S.
dollars) in stocks, mainly of commercial banks.
China's largest insurer, China Life Insurance (Group) Company and its Hong
Kong-listed branch, China Life Insurance Company Limited, were among the biggest
buyers of shares in the Industrial and Commercial Bank of China (ICBC) when it
made its initial public offering in September.
The two companies together bought 6.4 billion HK dollars of stock in ICBC,
which is expected to list on the Shanghai and Hong Kong stock exchanges this
month.
Insurance companies make up five of the 14 strategic investors chosen by the
Bank of China for its A shares that listed in Shanghai in July.
Sun Jianyong, an official with the CIRC, said insurers' investments in
capital markets will continue to grow rapidly in line with premium
revenues.
