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China approves Schroders wealth JV

The partnership is the third Sino-foreign joint venture wealth management company approved to start business.

The China Banking and Insurance Regulatory Commission (CBIRC) has given the green light to a joint venture between UK-based asset manager Schroders and Shanghai-headquartered Bank of Communications (BOCOM) Wealth Management.

“Schroder BOCOM Wealth Management is the latest collaboration between Schroders and BOCOM. It is not only the second joint venture Schroders and BOCOM has established in the asset management and wealth management field, but also another demonstration of the great progress China is making in opening up its financial market,” David Guo, chief executive officer, China, Schroders, told FSA.

“Schroder BOCOM Wealth Management aims to further enrich the product supply of the domestic wealth management market, and meet investors’ diversified needs.”

Schroder Investment Management owns a 51% stake in the joint venture, while the Bank of Communications Wealth Management holds 49% of the shares.

The entity, Schroder BOCOM Wealth Management, is registered in Shanghai and has a registered capital of RMB1bn ($157.6m).

The joint venture obtained its initial approval to set up its business in February, 11 months before the approval for business commencement.

“The wealth management joint venture will focus on developing multi‐asset strategies, investment solutions that span across various risk dimensions and investment durations,” a Schroders’ spokesperson told FSA.

The firm has not given details about its expected product offerings and launch dates, but said more information will be announced “in due course”.

Opening to foreigners

The Schroder BOCOM joint venture is the third of its kind approved in China, after the CBIRC-regulated wealth management framework was introduced in 2019 allowing foreign shareholders to hold a majority stake in their ventures with domestic firms.

The framework was among 11 measures introduced by China’s Financial Stability Development Committee in July 2019 to encourage overseas participation in the country’s financial markets.

In September 2020, CBIRC gave the final approval for the establishment of the first joint venture, Huihua Wealth Management, owned by Amundi and the wealth management subsidiary of Bank of China.

The joint venture launched its first product after three months, a “fixed income plus” closed-ended fund.

Blackrock CCB Wealth Management was the second wealth management joint venture, which opened in in May last year, after receiving the go-ahead to set up the venture in August 2020.

It has been previously reported that Swiss private banking group Julius Baer is also mulling setting up a majority-owned joint venture in China.

Part of the Mark Allen Group.