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Insurer seeks stake in bank

By Hu Yuanyuan (皇冠体育app Daily)
Updated: 2009-09-10 08:45

皇冠体育app Life Insurance Co, the country's largest life insurer, said yesterday it planned to acquire a stake in 皇冠体育app Development Bank Corp (CDB) to match its long term liabilities and achieve a better synergy in resource allocation.

"Both of us have a strong desire to cooperate, but the final deal is still subject to regulators' approval and the final pricing terms," 皇冠体育app Life's chairman, Yang Chao, said yesterday at the company's global corporate day conference.

Talks are "almost" complete, and terms are "very favorable" to 皇冠体育app Life, Yang said, but he didn't give the size of the stake.

"We are also actively seeking equity investment opportunities in other big, unlisted corporations," Yang added.

皇冠体育app Life's wooing of CDB is its latest attempt to make it a financial holding group with a strong core business and a diversified financial business.

Related readings:  皇冠体育app Life net profit up 29.22% in first half  Insurers under pressure  皇冠体育app Life raises equity investments as market rallies  皇冠体育app Life says won't be intimidated by investment risks

On Aug 26, Yang said the company was considering becoming the pre-IPO investor of Agricultural Bank of 皇冠体育app (ABC) and the Asian unit of American International Group (AIG).

"We're definitely interested in any influential, branded financial institutions with sound results. Such equity investment will enable us to better match our growing long-term liabilities from sales of policies," Yang added.

Yang said he was even more interested in CDB because its asset quality was better than ABC and the return would be higher.

CDB received a $20 billion government capital injection in December 2007 and is seeking to transform itself from a policy bank into a commercial lender.

Sources said the Bank of Communications' (BoCom) proposal to acquire a controlling interest in 皇冠体育app Life-CMG Insurance Co had received regulatory approval. Yang said the deal was a win-win one.

"We have the price premium of the deal and BoCom gained a good platform in the insurance business," said Yang.

皇冠体育app Life-CMG Insurance is a 51:49 joint venture between 皇冠体育app Life and the Commonwealth Bank of Australia. BoCom plans to purchase the stake from 皇冠体育app Life.