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August 13, 2009

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BoCom expects insurance unit launch

THE Bank of Communications expects to start its own insurance unit this year, one of its senior executives told Shanghai Daily yesterday.

Dicky Yip, BoCom's executive vice president, said the country's fifth-biggest lender is awaiting regulatory approval for the unit.

The Shanghai-based lender hopes to cross-sell its own insurance products at its bank branches, Yip said on the sidelines of a news briefing in Shanghai.

The bank has already operated a bancassurance business by working with more than 10 insurers.

BoCom plans to buy a stake in China Life-CMG Insurance Co, a venture between China Life Insurance Co and Commonwealth Bank of Australia, earlier media reports said.

Yip declined to elaborate further as the bank will release its first-half earnings report on August 20.

Chinese banks are eager to diversify income streams in the non-banking financial sector such as wealth management and insurance.

BoCom now owns a leasing unit, a trust subsidiary and a fund management venture with Schroders and is also seeking a brokerage license.

The bank is targeting China's growing affluent as it expands its OTO wealth management services.

"We previously planned that OTO centers would account for 15 percent of our total outlets. However, the figure may rise to 20 to 25 percent due to the strong growth in the sector," Yip said.

The bank expects to set up more than 400 OTO centers by the end of this year. It launched the services in May 2006, targeting clients with financial assets of more than 500,000 yuan (US$73,206).

BoCom said in June that it would further expand its private banking services to target those with investable assets of more than US$2 million.


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