China National Petroleum Corp (CNPC), the country's largest oil and gas producer, has got government approval to acquire a stake in a commercial bank in the Xinjiang Uygur autonomous region.

The Beijing-based CNPC has got approval from the State-owned Assets Supervision and Administration Commission of the State Council and China Banking Regulatory Commission to buy the stake in Karamay City Commercial Bank, the company said in a statement.

The deal was an important step for the company to develop its own financial business, said the statement.

CNPC will accelerate the development of the financial business to diversify its portfolio, a company source told China Daily yesterday.

After the deal, Karamay City Commercial Bank will change its name to Kunlun Bank, and its center of operations will move to Beijing, CNPC said.

The bank will first set up branches in Beijing, Daqing in Heilongjiang, and Changqing oilfield in Shaanxi and Inner Mongolia, it said.

CNPC will develop Karmay into a national commercial bank in future. The bank will mainly target three groups -- enterprises under CNPC and its customers, State-owned enterprises, and employees and their family members working in CNPC's different oilfields.

Analysts said the move is part of efforts by State-owned enterprises to diversify their businesses. China's three leading oil companies, CNPC, Sinopec and CNOOC have all started their own financial services business.

The China Insurance Regulatory Commission earlier gave CNPC permission to buy a 51 percent stake in Generali China Insurance Co.

The Beijing-based Generali China was previously a 50-50 joint venture between Generali and CNPC. The property insurance underwriter was launched in August 2007 with 500 million yuan in registered capital.

Media reports said that CNPC was ready to issue $3 billion in medium-term corporate bills in the inter-bank market soon.

(China Daily April 29, 2009)