China's BoCom to invest in life insurer -sources

SHANGHAI Jan 15 (Reuters) - Bank of Communications (601328.SS) (3328.HK), China's fifth-largest lender by assets, is in talks to buy into a mid-sized Chinese life insurer, sources close to the situation said on Tuesday, as Beijing will soon allow banks to invest in insurance companies.

Bank of Communications (BoCom), in which HSBC Holdings Plc (HSBA.L) (0005.HK) holds a roughly 19 percent stake, may buy a stake in Shanghai-based China Life-CMG Insurance Co, a 50-50 joint venture between Commonwealth Bank of Australia (CBA.AX) (CBA) and China Life Insurance (2628.HK) (601628.SS), said the sources close to BoCom, which is also based in Shanghai.

Earlier on Tuesday, sources close to Chinese regulators told Reuters that China's banking and insurance watchdogs will sign an agreement this week to allow banks to invest in insurance firms to expand their profit streams. For details: [ID:nSHA348487]

A deal would make Bank of Communications the first Chinese bank to buy into a domestic insurer under the new rules.

Bank of Communications plans to buy the stake from China Life, which wants to quit the joint venture with CBA to avoid potential conflict of interest as required by Chinese regulators, said the sources, who declined to be identified because they were not authorised to speak to the media before a deal is reached.

Bank of Communications is in advanced talks with China Life on a possible deal, although no agreement has been signed, the sources said.

They said the bank, controlled by China's Ministry of Finance, had submitted an initial proposal to the Chinese banking regulator seeking advice on the possible deal.

Bank of Communications was also looking to invest in a domestic property insurer, although it had no specific target to negotiate with, the sources added.

A Bank of Communications spokeswoman declined to comment, while China Life-CMG Insurance could not immediately be reached for comment. (Reporting by George Chen; Editing by Anne Marie Roantree)