China will allow domestic banks to invest in insurance
companies, said Yuan Li, assistant to the chairman of the insurance
regulator.
Yuan, speaking at a conference in Beijing on Saturday, confirmed
an earlier report by Caijing magazine, which said three to
four banks would be allowed to buy stakes in insurers under a pilot
program. The size of possible stakes was not determined, the
Beijing-based magazine said, citing unidentified people.
"The government has been encouraging banks to expand their
businesses and innovate," said Zhang Xi, an analyst at Galaxy
Securities Co in Beijing.
He said being able to develop insurance products would boost
banks' earnings potential.
China is letting state-owned banks widen their activities,
including broking and fund management, to help them add new sources
of revenue and boost profits, fending off increasing competition
from overseas rivals that were allowed in December to start
yuan-related businesses in all Chinese cities.
The move to allow investments in insurance companies may cause
banks to rethink plans to set up their own insurance ventures,
Caijing magazine said.
Bank of China Ltd, China Construction Bank Corp and Bank of
Communications Ltd have applied for permission to set up insurance
ventures.
China's insurance market is growing as the nation's 1.3 billion
people have more disposable income and are turning to private
insurers.
(Shanghai Daily January 14, 2008)
