(China Daily)
Updated: 2008-01-04 09:17

China Minsheng Banking Corp, the nation's seventh largest bank by market value, said yesterday it's been approved to set up a fund management company with Royal Bank of Canada and Three Gorges Financial Co.

The bank got the green light from the China Banking Regulatory Commission on December 28, Minsheng said yesterday.

It will be the country's sixth bank-initiated fund management company after ICBC Credit Suisse Asset Management Co Ltd, CCB Principal Asset Management Co Ltd, Bank of Communications Schroder Fund Management Co, AXA SPOB Investment Managers and the Agricultural Bank of China venture.

Banks have advantages over asset management firms in their reliable credit, wide networks and customer resources, said Chen Daofu, a researcher at the State Council Development Research Center.

Selling and being trustee of funds could bring banks considerable income, and diversified wealth management products will also strengthen customer loyalty, Chen said.

In October 2006, Minsheng said it would take 60 percent of the venture, while Royal Bank of Canada, that country's biggest lender, would control 30 percent. Three Gorges would hold the remaining 10 percent.

The fund company is Minsheng's latest move toward becoming a financial holding firm. The bank said in September it plans to pay 2.34 billion yuan ($321.87 billion) for a stake in Shaanxi International Trust & Investment Corp. Minsheng will also buy up to 20 percent of UCBH Holdings Inc - the biggest bank serving the Chinese community in the United States.