Principal Financial Group and China Construction Bank, partners since 2005 in a Beijing asset management joint venture, on Thursday announced a strategic cooperation agreement and memorandum of understanding to pursue a similar partnership in China's pension sector.
Thomas Cheong, Hong Kong-based vice president of Principal Financial Group's North Asia business, said the pension company CCB set up recently after obtaining an unprecedentedly broad license from China's pension regulator in November will be the foundation for that partnership.
That license allows CCB's pension company, from day one, to manage retirement assets for China's state-run first pillar, the Beijing-based National Council for Social Security Fund; the country's second pillar, corporate retirement system or enterprise annuities; as well as the third pillar, private pension accounts — a broader scope of business than the bank's competitors have at present, Mr. Cheong said in an interview.
Principal Financial will bring its expertise in pension management, including managing risk, to bear wherever needed to assist CCB in getting that company “up and running,” Mr. Cheong said.
Principal Financial said in a news release that it and CCB “will seek to set up joint business platforms” to pursue that pension business.
Dan Houston, Principal's president and CEO, noted in the release that his company will look to replicate the success of its asset management partnership with CCB.
As of Dec. 31, the two companies' asset management joint venture, CCB Principal Asset Management Co., had $42 billion in assets under management. Principal Financial holds a 25% stake in the venture.
