China Clears Four Banks for Investments in Insurers

BEIJING, Jun 25, 2008 (A. M. Best via COMTEX) -- CICHF | Quote | Chart | News | PowerRating -- China's banking regulator has cleared four domestic banks for investments in the insurance sector, six months after the government approved a trial program allowing banks to do so.

The four banks include Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and Bank of Beijing, according to the official Xinhua News Agency. The China Banking Regulatory Commission approved the banks' participation in insurance ventures following a January ruling by China's State Council that would allow commercial banks to get into the insurance sector.

Industrial and Commercial Bank plans to form a joint venture with China Insurance Group and the Dutch-Belgian financial services group Fortis, according to Xinhua. The venture is expected to acquire Taiping Life, Taiping Insurance, Taiping Pension and Taiping Asset Management Co.

China Construction Bank was approved to take a 51% stake in Beijing-based Happy Life Insurance Co. The insurer is now 52.2% owned by China Cinda Asset Management Corp., one of four state-owned firms set up to clear bad loans off the books of Chinese banks, Xinhua said.

Bank of Communications is expected to take the 51% stake in China Life CMG Insurance Co. now held by China Life Insurance Co., The other 49% stake is owned by Commonwealth Bank of Australia.

Bank of Beijing was approved to acquire a 50% stake in Pacific Antai Insurance Co., now held by China Pacific Insurance Co.

China Merchants Bank had earlier announced it would acquire a 50% stake in Cigna & CMC Life Insurance Co. The bank will pay 141.87 million yuan (13.2 million euros) for the stake, now held by Shenzhen Municipal Dingzun Investment Advisory Co., a unit of China Merchants Group.

(By David Pilla, international editor, BestWeek: David.Pilla@ambest.com)

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