BNP Paribas‘ asset management arm is in talks to form a wealth management venture with a unit of Agricultural Bank of China (AgBank), sources said, as the French firm pursues a bigger slice of China’s $19 trillion market.
China further deregulated its financial markets in 2019, allowing foreign asset managers to form majority-owned wealth management ventures with local banks. Foreign expertise can help Chinese lenders grow their investment capabilities as they phase out risky shadow banking businesses.
Two sources with direct knowledge of the talks told Reuters that the investment management arm of BNP Paribas will hold a majority stake in the planned venture with AgBank’s wealth management subsidiary.
BNP Paribas declined to comment. AgBank, China’s third biggest lender by assets, did not immediately return an emailed request for comment.
French rival Amundi and U.S. fund giant BlackRock have already formed Chinese wealth management ventures, while Schroders and Goldman Sachs are following suit.
Meanwhile, JPMorgan Asset Management has partnered with China Merchants Bank’s wealth management unit.
BNP Paribas Asset Management is in talks to form the venture with AgBank’s Agricultural Bank of China Wealth Management Co, the sources said, without giving financial details.
BNP Paribas AM already owns a Chinese mutual fund venture, and the new alliance would give it access to AgBank’s massive retail customer base.
“Getting the wealth management license is worth the effort,” a source with direct knowledge of the talks said.
Amundi initially discussed venture plans with AgBank, but eventually chose Bank of China as its partner, another said.
AgBank and other major state banks face political pressure to form wealth management JVs, sources said, an indication of China’s willingness to open up which could help Chinese banks build globally competitive asset management businesses.
BNP Paribas AM manages 489 billion euros ($579 billion) in assets, and offers a comprehensive range of active, passive and quantitative investment solutions. It’s also a major player in sustainable investing, which Beijing is aggressively promoting.
AgBank’s wealth management unit, set up in July 2019, had 1.1 trillion yuan ($170.24 billion)in wealth management products at the end of June.
China’s asset management market will grow to 210 trillion yuan in 2025, from 122 trillion yuan at the end of 2020, China Everbright Bank and Boston Consulting Group estimate.
Reuters