China Banking Regulatory Commission (CBRC) has given the Shanghai Pudong Development Bank (SPDB) the go-ahead to set up a fund management business, SPDB sources said on Tuesday.

The sources said the SPDB would formally apply to the China Securities Regulatory Commission (CSRC) for approval of the fund management company, which will be a joint venture between SPDB, a French investment management company and Shanghai Shengrong Investment Co.

SPDB will hold 51 percent of the new venture, said the sources. They did not specify the stakes of the other two partners nor the total registered capital of the new venture.

An SPDB official said the launch of the fund management company would provide new services for customers and expand profit-making channels for the bank.

The bullish domestic stock market since early last year has boosted investments in funds, luring Chinese banks into the fund management business.

Statistics show that by the end of last year, the net value of China's securities investment funds had reached a record 855 billion yuan (109 billion U.S. dollars).

China Minsheng Banking Corp. Ltd. established a joint fund management company with the Royal Bank of Canada and the Three Gorges Finance Co. last year.

With a registered capital of 200 million yuan, the joint venture will be based in Shanghai, one of China major financial hubs, and open branches in Beijing and Shenzhen.

Bank of China, the Agricultural Bank of China and China Merchant Bank are also in the process of setting up a fund management company, according to insiders.

Established in 1992, SPDB's operating income in 2006 was around 14 billion yuan.

Source: Xinhua