China Life eyes 10pc Huishang Bank stake
China Life Insurance, the country's largest life insurer, plans to buy about 10 per cent of Huishang Bank, a source familiar with the situation said yesterday.
'Related documents should have been sent to the China Banking Regulatory Commission for approval [and should be finalised soon],' said a source at Huishang, which is based in Hefei, Anhui province.
China Life is seeking to transform into a diversified financial company after the regulator allows domestic insurers to invest in other sectors. Such investment may also help mainland insurers to improve returns on their strong cash flow.
Last week the insurer said it will spend about 5.7 billion yuan to buy 20 per cent of Guangdong Development Bank and nominate three directors and one independent director to the lender.
China Life is also in talks to buy a stake in a small city commercial lender in Zhuhai, according to Reuters.
Small rival Ping An Insurance (Group) is also seeking investment in the banking sector, snapping up a majority stake in Shenzhen Commercial Bank.
Ping An also wants a stake in Shenzhen Development Bank, sources said.
Huishang has a registered capital of 2.5 billion yuan. It was founded last year by combining six municipal commercial banks and seven credit co-operatives in Anhui.
At the end of September, the lender's capital adequacy ratio was 8.31 per cent while the non-performing loan rate was 2.56 per cent, down from 4.45 per cent at the beginning of the year.
Huishang earlier said that it planned to expand its capital from 2.5 billion yuan to 3.5 billion yuan by introducing a domestic investor by the end of the year.
The bank may also forge an alliance with Dutch investment bank ABN Amro, according to the official website of the Anhui government.
'Business at Huishang Bank is good,' the government said, adding it 'hopes the ongoing discussion on co-operation between Huishang and ABN Amro will work out'.
