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Banks will soon be allowed to set up specialized fund management firms to tap the country's rapidly expanding pensions kitty, according to sources. Overseas investors will also be able to take part in these ventures by holding no more than a 49 percent stake. The Ministry of Labor and Social Security (MLSS) and These bank-owned fund management firms are likely to be issued licenses by August to become the second batch of qualified managers of corporate pensions, according to the official, who did not want to be named. He said a few banks have already submitted their applications to set up such firms. In August 2005, the MLSS approved 37 companies as the first batch of qualified managers of corporate pension funds. These included only two specialized pension fund management firms. "Most companies in the first batch were existing financial institutions, and only two of them were specialized corporate pensions managers," a source close to the China Banking Regulatory Commission said. "There's rising demand to set up professional firms in order to better manage these funds and reduce risks," he said. "On the other hand, it helps banks to expand into new businesses." Every month, 24,000 Chinese enterprises and their employees pay into corporate pension funds. These funds, which cover 9.64 million people in Only 15.8 billion yuan of this huge kitty is now being handled by professional investors. Increasing the number of qualified managers this year will provide companies with more options, said Liu Yongfu, vice-minister of the MLSS, in April, adding that more and more enterprises, especially small and medium-sized ones, will contribute to this type of fund (
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