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CIC is now considered a bank holding company by US financial regulators and is restricted from investing in US security brokerages, insurance firms and other businesses that are open to financial holding companies in a broader sense. The fund invests mostly in banking and non-financial businesses such as energy.
CIC's investments in the US have been under tough regulations due to distrust by local regulators toward sovereign wealth funds and political reasons, although CIC has repeatedly asserted that its investments are commercial.
The sovereign wealth fund drew fierce criticism at home for its steep losses from investments in US financial institutions, including Morgan Stanley and private equity firm Blackstone, sources told China Daily.
The latest move may help CIC diversify risks but it will hardly change its image as a State-owned investment fund, analysts said.
"It might help to some extent, but the spin-off is not going to change its image as the sovereign wealth fund endorsed by Beijing," said Li Xiaogang, director of the Foreign Investment Research Center at the Shanghai Academy of Social Sciences.
The spin-off is also unlikely to have a major impact on the country's State-owned lenders as the stake transfer will take place within the control of the central government, banking analysts said.