BoCom set to buy 51 percent of China Life-CMG: Caijing
Updated: 2009-06-03 07:13
(HK Edition)
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HONG KONG: The mainland's banking regulator has given two lenders the green light to buy into insurance companies, marking a key step toward universal banking, Beijing-based Caijing magazine reported on its website yesterday.
Bank of Communications (BoCom) would buy a 51 percent stake in China Life-CMG Insurance from China Life Insurance, Caijing said.
The foreign participant in that joint venture, Commonwealth Bank of Australia, would retain its 49 percent share of the venture, it reported.
Bank of Beijing would buy into ING Capital Life Insurance, a 50-50 joint venture between Beijing Capital Group and ING Group, but details of the deal had not been finalized, Caijing reported.
The Beijing lender, 16 percent owned by ING, announced earlier that it planned to buy a 50 per cent stake in the joint venture from Beijing Capital Group.
Officials at BoCom and Bank of Beijing declined to comment on the report.
The two deals had already obtained approval from the mainland's insurance industry regulator and would be endorsed by the central government before coming into effect, Caijing reported.
Beijing has relaxed rules to allow banks to enter the brokerage, fund management and insurance businesses, to help reduce their reliance on lending.
But the central government has been cautious in reducing the barriers between banking, brokerage and insurance, and the two deals are part of a trial program allowing banks to take equity stakes in insurance companies.
Industrial & Commercial Bank of China, China Construction Bank Corp and other lenders are also seeking to invest in domestic insurers.
Growth in premium income of mainland insurance companies continues to slow, as the industry regulator tightens sales of investment-linked products and demands an overhaul of the product mix.
Combined premium income was just more than 414 billion yuan (HK$470 billion) in the first four months, according to the latest data released by the China Insurance Regulatory Commission. This represented a 9 per cent year-on-year growth, lagging the 10 percent increase in the first quarter and the 13.25 per cent rise in the first two months.
Life insurance registered a 7.53 percent increase in premium income during the period, compared with 9.43 percent in the first quarter.
Property and casualty insurance premium grew a faster 14.16 percent year on year, up from a 12 per cent rise in the first quarter. The CIRC said insurers were placing more funds in bank deposits because of the volatile stock markets.
China Daily - Reuters
(HK Edition 06/03/2009 page16)