M and A

JP Morgan Pushes Into China's Wealth Sector

Tom Burroughes Group Editor 22 March 2021

JP Morgan Pushes Into China's Wealth Sector

It is the first time a Chinese bank has opened up its wealth-management subsidiary to a foreign strategic investor, JP Morgan said.

JP Morgan has agreed to pay $410 million for a stake in a Chinese wealth-management business, pushing into the Asian giant’s economy.

The lender’s asset-management arm plans to take a 10 per cent stake in the wealth subsidiary of China Merchants Bank, the bank said in a statement late last week. 

The report said that the deal is subject to being cleared by regulators. It is the first time a Chinese bank has opened up its wealth-management subsidiary to a foreign strategic investor.

The new agreement adds to a partnership agreed in 2019, under which JP Morgan Asset Management and the Chinese bank said they would collaborate on product development and investor education.

“We hope that the strong alliance will contribute to the opening up of China’s financial industry,” Liu Hui, executive assistant president of China Merchants Bank and chairman of the group’s wealth subsidiary, said. 

A number of Western banks have taken advantage of China’s liberalisation of controls on foreign firms entering its wealth and asset management space in recent months. UK-listed Schroder Investment Management has won regulatory clearance to set up a joint venture in Shanghai. 

A number of foreign firms have established JVs to tap into the world’s second-largest economy. Union Bancaire Privée, the Geneva-based private bank, last November announced that its wholly foreign-owned enterprise in China, UBP Overseas Investment Management (Shanghai), had partnered with Idinvest Partners, a European private equity firm and a subsidiary of global investment company Eurazeo. It was reported late last year that Julius Baer plans to create a majority-owned China JV. Amundi, the European asset management giant, and China’s BOC Wealth Management, won a licence to operate a joint venture in China last year. A Cerulli Associates report has pointed out the growth potential of such ventures. 

Credit Suisse aims to win full control over its securities venture in China amid plans to double its headcount and revenue. In 2020, Switzerland’s second-largest bank took majority control over the venture and has been working to upgrade its infrastructure as well as moving more bankers into China, Helman Sitohang said in February.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes