UBS and China Life’s asset management venture plan in limbo as talks stall – sources


The logo of Swiss bank UBS is seen in Zurich, Switzerland October 25, 2018. REUTERS/Arnd Wiegmann/File Photo

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SHANGHAI/HONG KONG, March 24 (Reuters) – UBS’s (UBSG.S) and China Life Insurance Group’s plan to set up an asset management joint venture in China is facing uncertainty as talks are in stalled due to a corruption investigation at the insurer and restrictions imposed on the scope of the business, two sources said.

China Life’s asset management arm and the Swiss bank began negotiations in late 2020 to jointly form a so-called “wealth management company” to manage money primarily from retail investors, Reuters reported in December. citing sources. Read more

Talks have now stalled, although they have not been officially called off, said the sources, who were aware of the matter but declined to be identified as they were not authorized to speak to the media. .

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The stalled talks underscore challenges for Western financial firms seeking to grow and grab a bigger share of China’s 100 trillion yuan ($15.7 trillion) asset management sector , which has opened up to greater foreign participation.

The talks cooled when China Life Insurance Group Chairman Wang Bin was investigated by the country’s corruption watchdog in January.

The development culminated in a review of planned deals initiated under Wang’s watch, the sources said.

Joint venture talks have also fizzled out because the scope of these asset management firms has been overstated, the sources said.

UBS had originally hoped that the planned business would be able to sell wealth management products (WMPs) through China Life’s army of insurance agents – an idea that later turned out to be misplaced under the new rules for the sale of these products published last year.

The China Banking and Insurance Regulatory Commission (CBIRC) issued rules in 2021 that state that only banks and other deposit-taking financial institutions are allowed to distribute WMPs.

UBS declined to comment, while a spokesperson for China Life Insurance Co Ltd (601628.SS), the listed arm of China Life Insurance Group, did not respond to Reuters request for comment.

“We are still pushing, but progress is below our expectations,” one of the sources told Reuters, referring to the state of play in the joint venture talks.

UBS had been seeking a majority stake in the company, which has been allowed by China in such partnerships since 2019.

In 2018, China allowed banks and other eligible financial institutions to set up so-called “wealth management companies” – essentially asset management companies – as part of a campaign to reduce banking. parallels at risk.

A subsequent push by Beijing to attract foreign investors to the space has led to a flurry of deals by global asset managers including BlackRock, Amundi, Schroders and Goldman Sachs to form majority-owned companies with Chinese lenders. .

($1 = 6.3677 Chinese yuan renminbi)

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Reporting by Samuel Shen in Shanghai and Selena Li in Hong Kong; Editing by Sumeet Chatterjee and Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.


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