China's Bank of Ningbo says to launch fund unit

SHANGHAI Aug 27 (Reuters) - Bank of Ningbo 002142.SZ, a mid-sized lender focusing on eastern China, plans to launch a fund subsidiary to tap the country's booming asset management business as its loan growth slows, Vice President Chen Xuefeng said on Wednesday.

Singapore's Oversea-Chinese Banking Corp (OCBC.SI) holds a 10 percent stake in Bank of Ningbo.

"We're considering how to make our growth sustainable," Chen told reporters after a media briefing in Shanghai, adding that the bank's loan growth would slow this year due in part to China's macroeconomic tightening.

"Fund management is a good, profitable business, and it's already on our agenda," he said, although he declined to give a timetable for when the fund unit would be launched.

Chinese banks have been expanding outside their traditional lending business to reduce their reliance on interest income.

On Tuesday, Bank of Beijing (601169.SS) said it was planning to set up a fund management venture with Canada's Scotiabank (BNS.TO), while major lenders such as Bank of Communications (601328.SS) (3328.HK) and Industrial & Commercial Bank of China (601398.SS) (1398.HK) have already set up fund ventures in recent years.

Bank of Shanghai, in which HSBC Holdings Plc (HSBA.L) (0005.HK) holds 8 percent, has applied to regulators to purchase 20 percent of Hua An Fund Management Co, one of China's biggest fund houses, local media reported.

Chen said China's economic tightening had reined in loan growth and made life difficult for the country's small and medium-sized enterprises, which Bank of Ningbo targets as major corporate clients.

Bank of Ningbo posted a 91 percent jump in first-half earnings on the back of robust lending and fee income-based intermediary businesses.

The bank, based in the eastern Chinese port city of Ningbo near Shanghai, is aiming to boost its income from fee-based services.

It has issued 600,000 credit cards and that is expected to more than double to 1.3 million by the end of next year, Chen said. (Editing by Edmund Klamann)