BlackRock, Temasek, CCB to set up China wealth management JV

BEIJING/SHANGHAI: US asset manager BlackRock Inc, Singapore state investor Temasek Holdings (Pte) Ltd and China Construction Bank Corp (CCB) have agreed to set up a wealth management joint venture in China, said people with direct knowledge of the matter.

A memorandum of understanding has been announced internally within BlackRock and CCB , according to the people and an internal notice seen by Reuters.

The deal comes as China’s government continues to open up its financial industry to foreign firms. On Friday, French asset manager Amundi SA said it had won approval to establish a majority-owned wealth management venture with a unit of Bank of China Ltd .

Chinese banks’ wealth management subsidiaries have broad business capacity including launching publicly-offered products, so they are attractive to international asset managers, said Yin Ge, partner at Han Kun Law Offices in Shanghai.

Forming wealth management ventures would also allow foreign asset managers to leverage Chinese banks’ distribution network, and “we have received increasing inquiries on this option,“Ge said.

BlackRock, the world’s largest asset manager, and Temasek will own the majority of the new venture due to ownership restrictions of wealth management units by Chinese banks, the people said.

CCB, China’s second-largest bank by assets after Industrial and Commercial Bank of China Ltd , set up a wholly owned wealth management unit this year and so cannot control another wealth management firm, the people said.

The state-backed bank has also launched a strategic partnership with BlackRock regarding investment, asset management, risk management and financial technologies, the internal notice showed.

CCB and Temasek did not respond to requests for comment. BlackRock declined to comment.

China has allowed foreign asset managers to set up private fund businesses, and next plans to scrap ownership rules on mutual fund businesses in April.

Other “leading and capable” foreign asset management firms are also in talks with Chinese banks to set up wealth management joint ventures, said Wang Daqing, large bank department chief at the China Banking and Insurance Regulatory Commission. – Reuters