Money

ICBC starts expansion into insurance sector

(China Daily)
Updated: 2010-10-29 09:51

Banking giant buys 60% stake in Paris-based AXA's China arm

BEIJING - Industrial and Commercial Bank of China (ICBC), the world's largest bank by market value, will start a major expansion into the insurance sector by buying a 60 percent stake in Paris-based group AXA's China life insurance venture.

The Industrial and Commercial Bank of China's branch in Nanjing, capital of Jiangsu province. [Photo /?China Daily]

ICBC will inject about 1.2 billion yuan ($180 million) in Shanghai-based AXA-Minmetals Assurance, said Yang Kaisheng, president of ICBC.

The French group will decrease its stake from 51 percent to 27.5 percent in the joint venture company. China Minmetals Co, the largest mining group in the country, will hold the remaining 12.5 percent, the bank said on Thursday.

ICBC will enhance the "one-stop" financial service network by providing banking as well as insurance businesses, Yang said. It will enhance cooperation with AXA and Minmetals by taking full advantage of its existing service networks, customer bases, IT system and branding. The bank will fully support the insurance company, ICBC Chairman Jiang Jianqing said.

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Henri de Castries, chairman of AXA, said that cooperating with China's largest commercial bank is of great importance to expand the insurance business in the Chinese market. The expected profit from the cooperation will be more than $1 billion in the long term, he said.

"It is a general trend that banks diversify into the insurance sector, as it may generate synergy with its banking business in the long-run," said Qiu Zhicheng, banking analyst at Guosen Securities.

"Other major banks may also seek to make forays into the insurance market later, when they find proper partners or operation models," Qiu said.

China Construction Bank Corp and Bank of China Ltd are also seeking to gain more market share by joining hands with big players, such as Ping An Insurance (Group) Co and China Life Insurance (Group) Co, in China's $100 billion life insurance industry.

ICBC boosted its third-quarter profit by 27 percent and net income climbed to 42.6 billion yuan from 33.6 billion yuan a year earlier, the Beijing-based company said in a statement on Thursday.