ICBC mulls bid for Pioneer to extend global reach in asset management

Chinese banks' global ambitions come as Euro lenders retreat from asset management business

PUBLISHED : Thursday, 03 April, 2014, 5:16am
UPDATED : Thursday, 03 April, 2014, 6:50am

Industrial and Commercial Bank of China is considering a bid for Pioneer Investments, one of Europe's biggest money managers, according to a person familiar with the matter.

Pioneer, owned by Italy's biggest bank by assets, UniCredit, managed €174 billion (HK$1.86 trillion) as of the end of last year.

British newspaper The Sunday Times previously reported that ICBC could pay as much as €2 billion for Pioneer.

Such as deal would mark the biggest-ever acquisition of a Western money manager by an Asian company.

There is more urgency for banks in China to accelerate global growth in response to a slowing market at home and as the country's leadership change precipitates more financial sector reforms, putting further pressure on profit margins.

It clearly would make a big difference to [ICBC's] credentials
Stewart Aldcroft, Citi Securities

The global ambitions also come at a time when European banks are retreating from the asset management business in a bid to repair crisis-battered balance sheets.

"It would be a very significant development because it clearly would make a big difference to [ICBC's] credentials," said Stewart Aldcroft, a senior adviser in the Asia-Pacific for Citi Securities and Fund Services.

Media reports have indicated that UniCredit plans to list or sell Pioneer, which operates in 27 countries including India and Singapore.

The bank declined to comment on those reports earlier this month.

UniCredit declined to comment on ICBC's interest. In an e-mailed statement, an ICBC spokesman denied that it was in talks with Pioneer.

ICBC, the world's largest bank by market value, had not made a formal offer but had communicated its interest to the asset manager, the person said, declining to be identified because the talks are still private.

The Chinese bank bought 80 per cent of Standard Bank Argentina from Standard Bank London for an estimated US$600 million in cash in 2011.

The bank also formed a fund management joint venture with Credit Suisse in 2005.

UniCredit, meanwhile, has been seeking to downsize amid record financial losses and a restructuring plan aimed at streamlining it.

The Milan-based lender had tried to sell Pioneer four years ago, but abandoned that plan shortly after Federico Ghizzoni took over as chief executive in 2010.

Several European banks, including Lloyds, Santander and Societe Generale, have sold their asset management businesses over the past year.