By Leo Zhang
HSBC the Europe’s biggest bank, will form a venture with Ping An Insurance (Group) Co as part of its partnership strategy to tap new business on China’s mainland.

The bank may submit an application for the venture to financial regulators before the end of the first quarter next year, as reported , citing Michael Smith, chief executive of Hongkong and Shanghai Banking Corp.

China’s insurance market has been expanding by more than 25 percent annually in the past decade as booming economic growth bolstered personal incomes and the government encouraged citizens to turn to commercial insurance for protection and investment

HSBC, which started selling policies issued by Ping An this year, was formerly restricted to cooperate with Hang Seng Bank in seeking mainland partnerships as both failed to meet regulatory requirement on capital and licensing aspects to operate independently.

But as the Closer Economic Partnership Arrangement signed in 2003 lowered the threshold for Hong Kong lenders to expand on the mainland, HSBC and Hang Seng were allowed to form joint ventures separately.

Hang Seng Bank’s insurance unit is seeking a local partnership to form a joint-venture insurance company.

HSBC has poured nearly US$5 billion into China’s financial institutions, including stakes in Ping An and Bank of Communications Ltd.