Giant German insurer Allianz has won permission to set up an asset management joint venture in China, becoming the first foreign firm to be allowed to operate in the sector, said its partner, Guotai Junan Securities.

Allianz will own 33% of the business, which has been given the go-ahead by the China Securities Regulatory Commission (CSRC).

China is in the midst of opening up its banking, stock broking, insurance and fund management industries to foreign firms as part of its commitments as a member of the World Trade Organisation.

Allianz is to own the maximum permitted share of the business, while its partner, Guotai Junan Securities will hold the remaining 67%.

Developing trend

The two companies will invest a total of investment 100m Yuan ($12m) in the start-up, which will sell financial services.

Foreign banks and insurers are scrambling to get a slice of China's developing financial services market and China's regulators hope their presence can help to streamline and clean up the sector.

The CSRC is trying to crack down on bad loans, insider trading and corrupt loans by bank officials.

China's earliest asset management firms were set up over a decade ago to attempt to sell bankrupt state assets to foreign investors, saddling the sector with a poor reputation.

Meanwhile, US bank Newbridge's move to buy Shenzhen Development Bank (SDB) has taken a step forward, as four state-owned shareholders agreed to sell their holdings to Newbridge.

Their combined stakes total nearly 20% of the bank's shares.

Breakthrough

Shenzhen, the smallest of China's 10 commercial banks, has agreed to hand management control to Newbridge - the first time a foreign bank has received permission to run a Chinese bank.

"After the deal is completed, Newbridge will introduce advanced experience in international bank management as soon as possible," said SDB.

French bank Credit Lyonnais is waiting to hear the outcome of its application to operate China's first foreign joint venture securities firm.

Another French firm, Society Generale Group, has set up the first fund management partnership between a Chinese firm and a foreign firm with China's giant Baosteel Group.