Regulator opens up banks to insurers
By Hu Yuanyuan (China Daily)
Updated: 2006-06-13 09:05 However, as the industry watchdog hasn't yet revealed the details of the
regulations, most insurance companies are taking a cautious
approach.
"The policy loosening doesn't mean that insurance capital will
rush into banks," said Wang. "The quality of banks is the decisive
factor."
For insurance companies that attach more attention to quick
returns, investing in unlisted banks and buying banks' new shares are better
choices. For those that are more interested in long-term bancassurance
co-operation, listed banks with a separated stake structure would be preferable,
such as the Minsheng Bank, Merchants Bank and Huaxia Bank.
According to
Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC),
commercial banks will be allowed to set up insurance businesses.
"We
support a more comprehensive co-operation between commercial banks and insurance
companies in terms of cross-sector sales and agent business," Liu said in a
statement posted on the CBRC website.
The banking regulator is drawing up
rules with the central bank and the insurance regulator to allow broader scope
for lenders in terms of insurance and brokerage businesses, Liu
added.
Banks are currently allowed to sell policies for insurance
companies and securities funds for brokerages.
Under the new policies,
insurers no longer need to park most of their assets in low-yield government
bonds and bank deposits, while their investment returns should improve.
Statistics from the CIRC revealed that Chinese insurers had about 1.6
trillion yuan (US$200 billion) in gross assets by the end of February. The
average return on investment of China's insurers is expected to rise from 3.5
per cent in 2005 to 5 per cent in 2006.
(For more biz stories, please visit Industry Updates)
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