Bank of China, one of the four largest Chinese commercial banks has agreed to purchase 30 per cent of Heritage Fund Management SA according to an announcement by Heritage Bank reported in Le Temps.

Shares in the fund manager have been transferred to Jacques Méchélany who is the managing director of the company (and was a co-shareholder together with Heritage Bank) with a 30 per cent stake being taken by Bank of China (UK) which is regulated by the Financial Services Authority in the UK. The new investor is thus technically a UK company.

Subject to a new approval from the Swiss Federal Banking Commission, a capital increase will allow the Bank of China (UK) to increase its investment to 70 per cent later in the summer with Mr Méchélany holding the remaining 30 per cent. The company will then change its name to Bank of China (Suisse) Fund Management and move out of Heritage Bank’s building in Geneva.

Heritage Fund Management which has long been focused on investments in Asia and Heritage Bank, with some SFr4.5 billion in assets under management, is shifting its focus to Latin America where it has a significant office in Uruguay.

There are no plans for the Bank of China (Suisse) Fund Management to apply for a Swiss banking licence at this point. The aim is to develop a Swiss fund management arm for the Chinese bank and to develop new products that will serve the Chinese market.

This deal represents the first major equity participation by a Chinese bank in a Swiss entity and has been welcomed by the industry. Mr Steve Bernard director of the Foundation, Genève Place Financière is quoted as saying that “We can be proud that a significant member of the Chinese finance industry has chosen Geneva over London or New York.”