CBA to Expand Life Insurance Operation in China

Submitted by Jim Thesiger on 29 January, 2010 - 07:06

One of the leading Australian financial institutions- Commonwealth Bank of Australia (CBA), which provides various types of financial service to companies, small businesses and individuals is about to extend its China Life Insurance join venture operation in an attempt to cover the national market after one of the major Chinese banks (the fifth largest one of the country) took as much as 51 percent share in the business. It is to be mentioned that the Chinese regulator has approved Bank of Communications Co (BoCom) to make an entry to the insurance market- the first one among the Chinese banks that got the approval. In a statement, CBA authority stated that the Bank of Communications Co took over 51 percent ownership of China Life CMG lately. The decade long CBA- China Life CMG joint venture was renamed as BoCommLife Insurance Company.

According to Simon Blair, the CBA group executive of international financial services, the join venture is likely to tap the huge countrywide distribution network of BoCom. Mr. Blair added that BoCommLife Insurance Company was trying to establish a competitive life insurer which will cover the national market of China. It is to be mentioned that as of September 30th, 2009, BoCom had $537 billion worth of total assets. The 2009 interim report of the bank reveals that it owns as many as 350 wealth management centres along with 107 branches in China and has eight branches outside the country.

Commonwealth Bank of Australia recorded a $70 million worth of after-tax cash profit from the China operations for the year to June 30th, 2009, something that stands for 14.9 percent of total net cash profit from its global businesses. CBA also managed to earn as much as $142 million from insurance during this period. In addition to this, CBA owns 20 percent ownership of the Qilu Bank, (the former Jinan City Commercial Bank) and 19.9 percent stake in Bank of Hangzhou.