Agricultural Bank of China and BNP Paribas to set up wealth management JV

A wholly owned subsidiary of the Agricultural Bank of China (ABC) has been granted approval to set up a wealth management joint venture (JV) with BNP Paribas Asset Management. ABC Wealth Management Co will cooperate with BNP Paribas Asset Management to set up a JV wealth management company. ABC Wealth Management Co will hold 49% of the venture and BNP Paribas Asset Management will hold 51%. “Foreign banks' cooperation with Chinese banks is based on China's huge market and its growth outlook," Dong Dengxin, Director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times. Increasing cooperation in this sector shows that China's strategies of globalization and opening of its capital market have been recognized by most foreign countries.

“With economic development, Chinese people will demand more wealth management services, so China is at the starting point of wealth management market explosion,” Guo Xinhua, Managing Partner in Deloitte China's investment and management division, told domestic financial media outlet “With the acceleration of financial technology and related regulations, the domestic wealth management market has obvious growth potential,” Guo said.

Several wealth management joint ventures have already been set up. In September 2020, Amundi BOC Wealth Management Co, a JV of France-based investment bank Amundi and Bank of China (BOC), received regulatory approval, with Amundi taking a 55% stake. In May 2021, U.S.-based BlackRock, Singapore's Temasek Holdings and China Construction Bank (CCB)set up a JV to carry out asset management business in China.

“Cooperating with foreign financial firms or banks might be a shortcut for large Chinese banks to enter the global market, and this form of cooperation will accelerate the localization of foreign firms in China,” said Dong Dengxin. The high-quality opening of China's financial market is steadily advancing. In the fields of banking, securities, insurance and funds, the restrictions on foreign shareholding levels have been gradually lifted and the scope of permitted business widened. Thus, the number of wholly foreign-owned institutions has risen, the Global Times reports.