China Life and ICBC unite to look after pensions

PUBLISHED : Tuesday, 12 December, 2006, 12:00am
UPDATED : Tuesday, 12 December, 2006, 12:00am

Industrial and Commercial Bank of China, the country's largest lender, said China Life Insurance, the country's largest insurer, has chosen it to manage the assets of its general insurance and pension ventures.

China Life and its parent set up a venture to serve corporate annuity plans in March and a venture to run property and casualty insurance in October.

In the same statement, Industrial and Commercial Bank said insurance assets that it manages for 26 insurers have reached 76.8 billion yuan.

Previous reports indicated that the bank had 30 billion yuan of insurance assets under its management at the beginning of the year.

Already the largest custodian among Chinese lenders, ICBC is trying to increase its market share in asset management services for insurers, fund management companies and brokerages.

Its managed assets increased by an average 75 per cent in the past three years to 213 billion yuan by the end of 2005.

However, asset management services account for only a small percentage of the bank's total earnings.

In 2005, they contributed 260 million yuan to total profits of 90.2 billion yuan.

'The custodian service is only a small part of the company's business right now but it is less risky', said Wu Yonggang, an analyst at Guotai Junan Securities.

With the country's insurance market growing fast, both Chinese and foreign lenders hope to benefit from providing custodian services for expanding insurance assets. ICBC became the first lender to manage insurers' asset in October 2004 when it signed an agreement with China Life.

Besides insurance assets, the lender plans to manage more assets for securitisation products, Qualified Foreign Institutional Investor business which allows foreign investors to invest in A share securities, and Qualified Domestic Institutional Investor business, which allows local investors to invest overseas, Zhou Yueqiu, the head of the asset custody department of ICBC, said earlier this year.

Up to the end of 2005, the five biggest Chinese banks were in charge of only 30 per cent of the total QFII assets of US$6 billion. Foreign banks managed the other 70 per cent.