SHANGHAI (Reuters) – Schroders said on Monday it had received Chinese regulatory permission to form a majority-owned wealth management venture with a unit of Bank of Communications (BOCOM), the country\u2019s fifth biggest lender.<\/p>\n
The announcement came days after Schroders applied to set up a wholly-owned mutual fund business in China, where the government fully opened up its giant financial sector to foreign companies last year.<\/p>\n
\u201cSchroders has long been committed to the Chinese market,\u201d Peter Harrison, Schroders Group Chief Executive Officer, said in a statement.<\/p>\n
\u201cThe Chinese market represents a significant opportunity for Schroders, entailing the world\u2019s second and third largest equity and bond markets respectively.\u201d<\/p>\n
But some fear Schroders is setting up too many platforms in China, potentially diluting its resources to run its local businesses. Schroeder already owns a mutual fund venture with BOCOM and operates a private fund business in the country.<\/p>\n
\u201cWhy would they burn themselves with an additional platform?\u201d said Peter Alexander, founder of fund consultancy Z-Ben Advisors.<\/p>\n
\u201cThey have decided to put a lot on their plate. They\u2019re going to have to find a way to execute.\u201d<\/p>\n
The new wealth management venture, based in Shanghai, will be 51% controlled by Schroder Investment Management Ltd, and 49% owned by BOCOM Wealth Management Co.<\/p>\n
It\u2019s the third wealth management venture in China. Amundi partnered with Bank of China, while BlackRock and Temasek Holdings (Pte) Ltd are setting up a similar venture with China Construction Bank.<\/p>\n
\u201cWe look forward to being able to support savers in China with innovative investment products …\u201d said Lieven Debruyne, Schroders Global Head of Distribution.<\/p>\n
Alexander of Z-Ben Advisors said the foreign scramble to partner with Chinese banks did not necessarily ensure success in China.<\/p>\n
\u201cThere is this overwhelming desire, among foreign asset managers to gain some access to distribution,\u201d Alexander said.<\/p>\n
But \u201cmarketing is what really matters. And this is what\u2019s being overlooked by a very myopic, large group of global managers.\u201d<\/p>\n