HSBC to form JV insurance firm in China

China's insurance regulatory has finally approved HSBC Holdings'<5> proposal, to establish a new joint venture insurance company. This is the first venture of such nature, whereby a foreign insurer forms a venture bridging Hong Kong and China.

Together with National Trust, a Chinese trust and investment firm, HSBC will enter into a 50-50 venture, to build up an individual insurance network, with a strong emphasis on life insurance, in the nation with the largest population.

Although HSBC has yet to arrive with a figure for the initial start up of the entire operation, the company revealed incurring a minimum of US$67 million for the acquisition of an operational license within the country. Headquartered in Shanghai, the new firm is scheduled for operation to commence around the later half of 2008.

According to the report, sales of the insurance services will be conducted through National Trust's business network, and HSBC's banking clientèle. Sales are also likely to be diverted to Bank of Communications<601328><3328>, a Chinese commercial bank, where HSBC has 18.6% stakes in.

China insurance premium business amounted to US$49.5 billion in the first six months of the year, increasing by 20% from the same period last year.