Insurers can invest in banks

Asia

Chinese insurers will be allowed to invest in local banks, according to an announcement by the China Insurance Regulatory Commission. The move is likely to speed up the development of the bancassurance sector in China. This news follows the announcement in April by the Chinese central bank that local insurers will be allowed to invest up to 15% of their assets in foreign fixed-income and money-market instruments. Matthew Phillips, a partner in the transactions services group at PricewaterhouseCoopers China, said that the promise is very much that banking and insurance markets will open up further to foreign competition by the end of 2006. “Deals in China have skyrocketed despite the fact that ownership rules mean that foreign investors still have limited influence over their Chinese investments. Also, the recent introduction of new regulation is slowing the pace of change such as, for example, the hampering of the roll-out of bank branches.”