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Bank of China, Construction Bank eye insurance
(Reuters)
Updated: 2005-12-12 15:16
Bank of China and China Construction Bank Corp. are seeking approval to enter the insurance business, a senior regulator said on Monday.
Li Kemu, vice-chairman of the China Insurance Regulatory Commission, said his agency was in discussion with the two banks. He gave no further details.
Speaking at a financial forum, Li said regulators were also looking at ways to ease the path for foreign insurers seeking to enter the Chinese market.
"The commission is very serious about opening China's insurance industry and we'll work to improve the treatment of foreign companies," he said.
Domestic banks and insurers are barred under current rules from tapping into each others' businesses at a time when foreign firms are accelerating their drive into China's financial services to mine over $1.7 trillion in personal savings.
The insurance sector is expanding as Beijing dismantles a cradle-to-grave welfare system. Foreign players such as American International Group Inc. are gaining wider access under commitments made when China joined the World Trade Organisation in 2001.
State media reported earlier this year that both the two largest lenders -- BOC and CCB -- were planning to enter the insurance business to generate a new stream of profits.
Industry sources have also said that China's fifth-largest bank, Bank of Communications , of which HSBC Holdings Plc. owns nearly a fifth, was in talks for months trying to set up China's first bank-run insurance company.
Last month, BoCom president Zhang Jianguo told Reuters that its plans for an insurance unit were on course and the bank was aiming to lure foreign partners to the project.
Of China's 1.3 billion people, fewer than 4 percent have insurance coverage, according to official data.
So far, no Chinese bank has been allowed to invest in the insurance sector, where premiums rose 11.3 percent in 2004 to 431.8 billion yuan. China Life Insurance Co. , Ping An Insurance and China Pacific dominate the industry. (Additional reporting by George Chen in Shanghai)
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