Mandatory Provident Fund (MPF)

Manulife narrows gap with HSBC in race for leading share of Mandatory Provident Fund

PUBLISHED : Wednesday, 16 November, 2016, 7:49pm
UPDATED : Wednesday, 16 November, 2016, 10:43pm

Manulife (International) Limited, the second-largest fund provider to the Mandatory Provident Fund (MPF), has set its sights on eventually surpassing HSBC for the No 1 spot, bolstered by its recent acquisition of the MPF business of Standard Chartered.

“We hope the day will come as soon as possible,” Luzia Hung, senior vice president at Manulife said, adding that the company did not rule out further acquisitions.

“Generally there will be further consolidation in the market because efficiency and scale are becoming more important,” Guy Mills, chief executive officer of Manulife said.

Manulife announced the acquisition of StanChart’s MPF and Occupational Retirement Schemes Ordinance (ORSO) businesses in September 2015, without disclosing the price. They kicked off the 15-year exclusive MPF distribution partnership starting from November, which allows Manulife to distribute its products to StanChart’s individual and corporate customers in the city.

Standard Chartered has over 1.2 million retail clients, with thousands of corporate clients and 90 branches around the city.

“We do have a distribution network that Manulife can leverage,” May Siew Boi Tan, chief executive at Standard Chartered said.

Manulife had a 19.3 per cent share of the MPF market as of September 30 in terms of assets under management, while StanChart had a 2.4 per cent share, according to the Gadbury MPF Market Shares Report. Manulife is already the No 1 provider in terms of net inflows in the third quarter.

Manulife’s market share will rise to 21.7 per cent following the acquisition, compared to HSBC at 29.2 per cent, including the 7 per cent market share from Hang Seng Bank.

Hung said Manulife will spend the coming 12 months consolidating products of the two MPF providers, which is still pending approval from regulators.

StanChart has a total of 25 funds under its two MPF schemes, while Manulife has three schemes with 27 funds.

Market watchers expect the MPF provider to cut its management fees as the increased business leads to cost savings.

Mills said that Hong Kong’s MPF market will see further reduction of fees as economies of scale come into play.

“The MPF industry is still relative young. As MPF assets accumulate, costs will naturally go down. It’s a long term trend,” he said, adding that Manulife will regularly review its fee policy to remain competitive.

Manulife’s takeover reduces the number of Hong Kong’s MPF providers from 15 to 14.

The market has seen a number of smaller players bought by larger ones. Principal acquired AXA’s MPF business in September last year, while Canadian financial services company Sun Life, the city’s seventh largest player with 5.3 per cent market share, acquired Schroders MPF arm this June and proposed the acquisition of FWD’s MPF and ORSO business in August.

Manulife Financial Corp’s Hong Kong-listed shares closed at HK$132.10 on Wednesday, easing 0.8 per cent for the session, while having risen 12 per cent so far this year.