China regulator allows banks to invest in insurers

China's banking regulator has issued decision despite caution on possible problems resulting from financial sector integration.

China has formally started a trial to let its commercial banks invest in insurance companies, the banking regulator said, in a long-awaited move to better integrate the country's financial sectors, according to a report in Forbes.

The China Banking Regulatory Commission, in a statement on its website (www.cbrc.gov.cn), did not say how big a stake banks would be permitted to hold. It made clear, though, that a lender can only invest in one insurer.

China has quickened its pace in breaking down barriers between its financial firms, allowing them to expand into each other's territory.

China remains wary, however, of its financial firms being too closely linked and problems spreading rapidly among them, and so its new rules mandated considerable distance between banks and their insurance partners.