has received a boost following the signing of memorandum of
understanding (MoU) between the country’s insurance regulator,
China Insurance Regulatory Commission (CIRC), and the bank
regulator, the China Banking Regulatory Commission (CBRC). In a
release, the CBRC said the MoU will “deeply strengthen business
cooperation between banking and insurance sectors and the
cross-sector supervisory co-operation”.
The CBRC said the agreement had been reached on six aspects of
the investment by banks in insurers and insurers in banks including
review and approval procedures for cross investments and regulatory
functions and responsibilities.
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In reality, the MoU addresses a process of integration of the two
industries already underway, though this has been limited to
insurers buying stakes in banks. China Life Insurance Company began
the process in December 2006 when it acquired a 20 percent stake in
Guangdong Development Bank for RMB5.67 billion ($790 million). In
2007 a second Chinese insurer, Ping An, followed suit, acquiring 89
percent of Shenzhen Commercial Bank for RMB4.9 billion.
“So far, the equity investment of insurance firms in banks has
proved good for banks’ improvement in equity structure and
corporate governance,” noted the CBRC.
According to the CBRC, as at the end of September 2007 there were
80,000 bank offices doing insurance agency business, accounting for
half of the insurance industry’s agency network, 61.49 percent of
premium income generated by agencies and 18.89 percent of total
premium income.
