China’s banking regulator issued strict rules governing banks’ investments in insurers Thursday, in a move to limit the potential risks arising from such cross-sector investments.
The China Banking Regulatory Commission said in a statement it will allow commercial lenders to invest in only one insurer each.
The regulator said banks must deduct the value of their investments in an insurer from their capital.
That stipulation will likely make investments in insurers less attractive for banks, who were told by the regulator earlier this week to strictly adhere to capital adequacy regulations.
The rules also limit certain types of financial transactions between banks and the insurers in which they have invested.
