Schroders has received regulatory approval to establish a wealth management joint venture in Shanghai with BOCOM Wealth Management, according to a joint statement from both firms.
Schroder Bank of Communications Wealth Management (Schroder BOCOM Wealth Management) will be majority-owned by Schroders with a 51% stake, while BOCOM Wealth Management will hold the remaining 49% of shares.
Without elaborating, the statement said that the next phase will be for Schroders and BOCOM Wealth Management to work closely together to set up the JV.
“The Chinese market represents a significant opportunity for Schroders, entailing the world’s second and third largest equity and bond markets respectively,” Peter Harrison, Schroders group CEO, said in the statement.
This is the third wealth management JV partnership under the China Banking and Insurance Regulatory Commission (CBIRC)-regulated wealth management framework introduced in 2019 that has a foreign shareholder holding a majority stake.
Amundi BOC Wealth Management was the first JV partnership that was formed under the framework and has already started launching products in December last year. Temasek and Blackrock, meanwhile, received a go signal from the regulator to form a wealth management JV with China Construction Bank in August.
It was also previously reported that Julius Baer has plans to establish a majority-owned JV in China. If successful, it will be the first major private bank to set up a wealth management joint venture in the mainland.
OTHER VENTURES IN CHINA
The partnership between Schroders and BOCOM dates back to 2005, when both formed a public JV fund management company (FMC), BOCOM Schroders Fund Management.
“The two firms have gained valuable experience and trust in its partnership of over 15 years with our mutual confidence and understanding transcending both businesses,” Lieven Debruyne, Schroders’s global head of distribution, said in the statement.
“This partnership has until now enabled us to support the asset management needs of investors on the mainland and we are now well placed to grow our onshore wealth management proposition.”
Besides its JVs, Schroders also has a wholly foreign-owned enterprsie (WFOE) in Shanghai, which offers six private fund products to domestic qualified investors, which include institutions and high-net-worth individuals.
The firm also plans to establish a stand-alone FMC. Last week, Schroders filed an application with the China Securities Regulatory Commission (CSRC) to establish an FMC in the mainland.