China Construction Bank (CCB) will buy the entire 50 percent stake held by Dutch financial conglomerate ING Groep NV in Pacific Antai Life Insurance Co, to further expand its presence in the insurance sector.
The acquisition will expand CCB's customer base and also help it to integrate its banking and insurance businesses, the bank said in a statement posted on its website yesterday, without giving any financial details of the transaction.
Shanghai-based Pacific Antai Life Insurance Co, with total assets of 3.5 billion yuan and 300,000 policyholders, is a joint venture set up by ING and China Pacific Insurance Co in 1998. The two companies hold identical stakes of 50 percent in the venture.
The announcement come contrary to earlier reports that Bank of Beijing, 16 percent owned by ING, was planning to invest in Pacific Antai Insurance.
"The present move is in line with the general trend of an increasingly interwoven business mix between banks and insurance companies," said Liu Jun, a banking analyst with Changjiang Securities.
The permission follows a memorandum on enhancing cross-sector supervision issued by China Banking Regulatory Commission and China Insurance Regulatory Commission in early 2008.
Bank of Communications, the nation's fourth largest lender by market capitalization, is also reportedly planning to buy a stake in China Life-CMG Life Insurance Co, a Shanghai-based joint venture between China Life Insurance and Commonwealth Bank of Australia.
CCB said the deal still has to be cleared by the regulatory authorities.