Chinese regulator approves JPMorgan, Standard Chartered fully-owned ventures on the mainland

JPMorgan’s acquisition of a 49 per cent stake in China International Fund Management from Shanghai International Trust was approved on Thursday
Standard Chartered has also been cleared to set up a wholly-owned securities brokerage, allowing the bank to offer underwriting and asset management services

Banking & finance

Bloomberg

Published: 11:28am, 20 Jan 2023

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JPMorgan Chase gained full control of its China mutual fund, joining rival Manulife Financial in buying out local partners to secure full ownership of a business in the 26 trillion yuan (US$3.8 trillion) market.

The China Securities Regulatory Commission (CSRC) approved the US bank’s acquisition of a 49 per cent stake in China International Fund Management (CIFM) from Shanghai International Trust, according to a statement from the regulator on Thursday.

The watchdog also approved Standard Chartered to set up a wholly-owned securities brokerage on Thursday, saying the London-based bank can offers services such as underwriting and asset management. The registered capital of the new brokerage stands at 1.05 billion yuan, according to a separate statement from the CSRC.

The permissions came after China quickened approvals for global firms towards the end of 2022, when Manulife’s acquisition was cleared and Fidelity International and Neuberger Berman Group’s new units started operations. The expanding ranks of wholly foreign owned players are intensifying competition in a market embracing brightened prospects after China reversed its stringent Covid-19 curbs.

The registered capital of Standard Chartered’s new brokerage in China stands at 1.05 billion yuan. Photo: Reuters

“This is just the latest in a series of approvals for foreign groups to build and expand in China,” said Peter Alexander, managing director at Shanghai-based consultancy Z-Ben Advisors. “The China reopening trade is about much more than just investing into stocks.”

He said the flurry of approvals adds to evidence that China is serious with its commitments to open up, countering scepticism among some global firms that it’s “unsustainable.”

JPMorgan CEO Jamie Dimon has said that his firm is committed to bringing its “full force” to China. CIFM, set up in 2004, has been JPMorgan’s beachhead for tapping the country’s growing affluent.

Manulife takes control of China unit as foreign ownership barriers fall

CIFM oversaw almost 200 billion yuan of assets as of the end of June, serving about 61 million retail and institutional clients, according to its website. JPMorgan needed to pay at least 7 billion yuan for the 49 per cent stake, a 51 per cent premium over the appraised value of the stake, according to a statement in 2020. The latest statement did not disclose a final price.

New York-based JPMorgan said in 2018 it was seeking majority control of the fund business. Manulife in November became the first global firm to win full control of a local fund business through an acquisition.

JPMorgan won control of a local securities joint venture in 2019, and raised its ownership in a futures firm to 100 per cent in 2020.

Standard Chartered is also considering to set up a stand-alone wealth management unit in China to sell mutual funds to retail investors, people with knowledge of the matter told Bloomberg last year.

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