Bank of Communications Acquires 51% Stake in China Life-CMG Life Assurance

Bank of Communications (BOCOM) said it has been approved by Chinese banking and insurance regulators to purchase a 51% stake in China Life-CMG Life Assurance Company Ltd., a joint venture between China Life Insurance (Group) Co. [52446] and Commonwealth Bank of Australia.

The bank did not disclose the transaction amount, saying only that the acquisition has turned BOCOM into "the first domestic commercial bank to become a shareholder of an insurance company in China."

The bank also said that "the planned insurance company is an important step in the efforts of BOCOM to establish as a financial conglomerate," which indicates the bank seeks to diversify its businesses related to its wholly-owned Hong Kong-registered insurance unit, China BOCOM Insurance Co. Ltd. [77690], along with an international investment banking and security unit, fund management unit, international trust unit, finance leasing unit and a newly incorporated insurance joint venture unit.

Establish in 1908, Bank of Communications is one of the four largest banks and one of the early-stage note-issuing banks in China. Having experienced political and economical changes, the bank was restructured and opened for business again in 1987, becoming the first state-owned commercial bank in China, with its headquarters in Shanghai.

Following further reforms of the Chinese financial sector since June 2004, BOCOM has taken on HSBC, National Council for Social Security Fund of China and Central Huijin Investment Ltd. as strategic investors.

It also listed on Hong Kong stock exchange and Shanghai stock exchange in 2005 and 2007, respectively.

By the end of 2008, BOCOM recorded total assets of 2.68 trillion yuan (US$392.4 billion). Currently, it is the fifth-largest lender in terms of total assets in China.

China Life-CMG Life Assurance was established in Shanghai in June 2000. It offers life insurance, participating insurance, annuities, health insurance, accident injury insurance and foreign exchange insurance to Shanghai citizens.