CHINA Life Insurance Co. will subscribe for 13 billion yuan (US$2.8 billion) in Postal Savings Bank of China Co. shares as the country’s biggest unlisted lender moves closer to an initial public offering (IPO).

    China Life, the country’s biggest insurer by market value, will buy 3.342 billion subscription shares. After the transaction, China Life will hold no more than 5 percent of the enlarged issued share capital of Postal Savings Bank.

    The transaction will be completed in cash, China Life, which lists shares in Hong Kong and Shanghai, said Tuesday.

    The two firms also agreed to work together on areas such as corporate governance, cash management, personal finance, small and medium enterprise finance services.

    Postal Savings Bank, the country’s sixth-biggest bank, prepares for an IPO in Hong Kong in 2016.

    The bank said yesterday that it raised 45 billion yuan by selling about 17 percent of itself to investors including UBS Group AG, JP Morgan Chase & Co. and Temasek Holdings Pte. The sale is the biggest private fundraising ever undertaken in China’s financial industry, the lender said.

    Postal Savings Bank, an arm of China Post Group Co., is raising capital at a time when Chinese lenders are feeling the squeeze of shrinking profit margins and rising defaults amid the country’s economic slowdown. (SD-Agencies)