A Bank of China (BOC) official said on Tuesday that it was the first time he heard about the market rumors that the BOC was considering buying the insurance arm of the Royal Bank of Scotland (RBS) when Xinhua contacted him.

A report by the southern Guangzhou-based 21st Century Business Herald said the country's second largest bank intendeed to take over some or even all of Britain's second-biggest lender's insurance business.

The unnamed official from the bank's secretary's office of the board of directors said "the BOC was cautious in any purchase move and the bank has already set up a global operations network".

"In considering new purchase activities, the bank would pay attention to those business opportunities that are conducive to its diversified business growth and that are complementary to the bank's existing business," he added.

The official said the bank already owned two insurance concerns, namely Beijing-based property insurer BOC Insurance and the Hong Kong-based BOCG Life.

RBS said last week it would consider selling all or part of its insurance arm in a bid to strengthen its capital ratios. The RBS Insurance division includes Churchill and Direct Line, Britain's largest car insurer.

The newspaper said European financial titans including Allianz, Axa, Generali and U.S. giant AIG had showed interest in the deal.

The BOC said its profits in the first quarter were 21.696 billion yuan (3.22 billion U.S. dollars), up 85.15 percent year on year due to greater net interest earnings and fee incomes, according to Tuesday's Shanghai Securities News.

Its net interest earnings in the first quarter stood at 40.815 billion yuan, up 18.74 percent year on year.

The bank's fee and commission income in the first three months surged 82.93 percent year on year to 9.45 billion yuan.

Total assets of the BOC rose to 6.34 trillion yuan as of March 31, up 5.83 percent from the end of last year.

The return on assets (ROA) ratio in the first quarter stood at 1.5 percent, 0.4 percentage points higher year on year and the return on equity (ROE) ratio rose to 20.17 percent, 6.17 percentage points higher year on year, which showed the "increasing profitability capabilities", said the BOC.

The BOC said its holdings of subprime mortgage investments stood at 4.428 billion U.S. dollars by the end of March, down from 4.99 billion U.S. dollars reported at the end of 2007.

Xiao Gang, the bank's board chairman, said the bank was "keenly alert" to various risks in the banking sector and was tracking the risks in the global financial market.

In 2005, RBS, a strategic partner of the BOC, took the lead to form a consortium acquiring a 10 percent stake of BOC for 3.1 billion U.S. dollars, of which RBS was committed to 1.6 billion U.S. dollars.

(Xinhua News Agency April 30, 2008)