China's second-largest life insurer, Ping An Insurance, said yesterday it will boost its stake in Shanghai Pudong Development Bank to nearly 5 percent as part of efforts to beef up its fledgling banking arm.

Hong Kong-listed Ping An Insurance (Group) Co. of China Ltd. said it will buy an additional 3.14 percent of Shanghai Pudong Development Bank for 1.97 billion yuan (US$250.2 million), valuing the lender at about US$8 billion.

The insurer -- of which HSBC Holdings Plc. owns nearly 20 percent -- will buy 144.76 million new A shares of Shanghai's largest lender, raising its interest to 215.33 million A shares or 4.94 percent, Ping An said in a statement.

A Ping An executive said the insurer is now planning to buy part of new shares to be issued by Beijing-based Minsheng Banking Corp. before the end of this year.

Minsheng, partly owned by Temasek Holdings, has said it is seeking regulatory approval to issue new shares to raise around US$1.5 billion to shore up its capital this year.

"Ping An is an institutional investor so banking stock investments in the likes of Pudong bank will be mainly for financial purposes," said another Ping An executive.

"Speaking from a strategic perspective, we will strengthen our own banking arm through management control of Shenzhen Commercial Bank and our own Ping An Bank," he added.

Earlier this year, Ping An bought a controlling 89 percent stake in small Shenzhen Commercial Bank, while its bigger rival China Life has bought a 1.75 percent stake in mid-sized Industrial Bank Co. Ltd., in which Hong Kong's Hang Seng Bank owns a 16 percent stake.

Ping An Insurance and HSBC also launched a brand-new Ping An Bank in Shanghai last year.

In October, Beijing issued new rules to encourage Chinese insurers to invest in the country's reforming banking sectors, also in an effort to expand investment channels of insurers.

Editor: Donald