Agricultural Bank of China (AgBank), the country's fourth largest lender, said on Friday that it would pay 2.59 billion yuan (392 million U.S. dollars) for a 51 percent stake in Beijing-based Jiahe Life Insurance Co.

The bank said that its board of directors had approved its plan to purchase 1.04 billion new shares issued by the insurer.

After the completion of the deal, the other four shareholders, including China New Era Co. and China Sigma Co., would each take a 9.8 percent stake in the insurer.

Pan Gongsheng, AgBank's vice president, said that the deal would provide the lender direct access to China's booming insurance market and drive new growth.

Founded in December 2005, Jiahe Life Insurance Co. offers life, health, medical, and accident insurance products. The company has 15 subsidiaries nationwide.

Jiahe's total assets reached 17.6 billion yuan by the end of 2010 and its premiums amounted to 4.52 billion yuan last year.

"We'll focus on providing insurance products tailored to people living in counties and rural areas," Pan said.

The government encourages commercial banks and issuers to hold stakes in each other to form financial conglomerates.

"It's an inevitable trend for lenders to expand their presence to non-banking financial services," Pan added.