Bank of Beijing Eyes Buying into ING Insurance JV

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The Bank of Beijing, which is 16 percent owned by the Netherlands ING Groep NV, said on Tuesday it is in talks to buy a 50 percent stake in one of ING’s life insurance ventures in China from the venture’s Chinese partner, as it moves to diversify its businesses.
Bank of Beijing is negotiating with Beijing Capital Group Co to buy its stake in ING Capital Life Insurance Co, the Beijing-based lender said in statement filed with the Shanghai stock exchange.

Dutch financial group ING owns the other half of the venture, as well as a stake in another life insurance venture in China, Pacific-Antai Life Insurance Co. “The long-term strategy for many Chinese lenders is to expand into non-banking financial businesses,” said Qiu Zhicheng, analyst at Haitong Securities Co. “But that would have little impact on lenders’ profit in the short term.”

China has relaxed its rules to allow banks to enter the brokerage, fund management and insurance businesses, to help reduce their reliance on lending as a decelerating economy threatens to slow loan growth and increase bad debts.

The Bank of Beijing’ statement, issued in response to a report the previous day in the official Shanghai Securities News, came three months after the lender said it would set up a fund management venture with Canada’s Scotiabank.

“As part of our development strategy, we will enter the insurance business under government rules at an appropriate time,” Bank of Beijing said in the statement.

“We are engaged in talks about purchasing Beijing Capital Group Co.’s stake in ING Capital Life Insurance Co, but at present there is no specific plan,” it added.

Industrial & Commercial Bank of China Ltd., China Construction Bank Corp and other lenders are also seeking to invest in Chinese insurers.

ING, hit hard like many global financial institutions by the credit crisis, has just obtained a €10 billion ($13.25 billion) lifeline cash injection from the Dutch government and announced it was selling its Taiwan life insurance unit to Fubon Financial Holding Co. (See related article).

(Reporting by Samuel Shen; Editing by Edmund Klamann)