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January 29, 2010

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BoCom launches insurance JV

BANK of Communications became one of the first domestic banks to invest in insurance when it opened its insurance joint venture in Shanghai with Commonwealth Bank of Australia yesterday.

BoCom bought a 51 percent stake from China Life Insurance Co, the biggest insurer in the nation, in China Life-CMG Insurance Co and renamed it BoComLife Insurance Co Ltd. CBA holds 49 percent in the insurer and is planning to cut its stake to comply with regulatory requirements, the Australian bank said.

"We intend to help grow the business nationally by tapping into BoCom's resources and its enormous distribution network," CBA Group Executive for international financial services, Simon Blair, said in a statement.

BoCom gained approval from China Insurance Regulatory Commission in September 2009 to buy the stake.

BoComLife will raise its registered capital from 200 million yuan to 500 million yuan (US$73.2 million) in the future to pave the way for a nationwide presence, BoCom said.

It will set up branches in Shanghai and Beijing as well as Jiangsu, Zhejiang and Guangdong provinces to build up its network nationwide. It operates only in Shanghai now.

BoCom, the fifth-biggest bank in China, already operates bancassurance business in conjunction with more than 10 insurers in the country.

Chinese banks are eager to venture into non-banking financial sectors such as asset management and insurance to diversify their income channels. Other banks, including the Bank of Beijing, are also going into the insurance industry.

Earlier this year, BoCom's partner, HSBC, set up its life insurance joint venture in Shanghai as it seeks to tap a growing need for financial protection.

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


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