Exclusive: UBS in talks with China Life for an asset management JV in China

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By Selena Li

HONG KONG (Reuters) – UBS Group AG is in talks with China Life Insurance Group to launch an asset management joint venture in China, two sources said, as part of the Swiss bank’s plan to strengthen its presence in China. second largest economy in the world.

UBS will hold a majority stake in the business unit, which, if finalized, will be the first foreign majority-owned asset management joint venture in China with an insurer as it has cleared majority foreign stakes in such partnerships. in 2019.

China Life and UBS have signed a memorandum of understanding to form the joint venture, the formal launch of which will be subject to approval by the China Banking and Insurance Regulatory Commission (CBIRC), one of the sources said.

The two sources declined to be identified due to the confidentiality of the interviews.

UBS declined to comment, while a spokesperson for China Life Insurance Co Ltd, the listed arm of China Life Insurance Group, did not respond to Reuters’ request for comment.

China has stepped up efforts to open up its trillion-dollar financial sector to help attract more foreign investment and support the economy, amid disagreements with the United States.

A series of foreign financial firms are in talks or have established majority-owned asset management firms in the country over the past two years, drawn by the prospect of rising wealth despite short-term economic challenges.

BNP Paribas’ asset management arm is in talks to form a wealth management firm with a unit of the Agricultural Bank of China, Reuters reported in September, as the French company aims for a larger share of the market. .

UBS’s talks to form a new asset management firm in China come after its failed attempts this year to strike a similar deal with a wealth management unit at a Chinese state-owned bank, the two sources said.

“UBS insisted on taking absolute control status in a Chinese unit, but its competitors do not hesitate to seize the best local partners,” said the first source.

PRESENCE IN CHINA

In total, 31 insurance asset management companies in China managed 18.7 trillion yuan ($ 2.94 trillion) in assets as of September, according to data from the regulator, the CBIRC.

The planned joint venture with China Life will further strengthen UBS’s presence in China, a market where it is already present in brokerage, investment banking and wealth management activities.

The bank owns a 49% stake in UBS SDIC Fund Management, an onshore fund management joint venture, through an acquisition in 2005, which held 149 billion yuan in retail fund assets as of Nov. 18.

In 2016, UBS’s asset management unit established a wholly-owned private fund management unit, which caters to high net worth individuals and institutional investors, with assets valued at over $ 2 billion yuan.

The scope of operations of the proposed joint venture with China Life has not yet been finalized and deliberations with regulators are underway, the sources said.

The state-owned China Life Group is China’s largest insurance group, with 4.5 trillion yuan in assets under management in 2020, mainly related to its subsidiary, China Life Asset Management Company.

($ 1 = 6.3664 yuan Chinese renminbi)

(Reporting by Selena Li; Editing by Sumeet Chatterjee and Clarence Fernandez)

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