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Money Management

J.P. Morgan wants majority stake in Shanghai manager joint venture

J.P. Morgan Chase said Monday it is looking to take a majority stake in its Shanghai-based fund management joint venture with Shanghai Pudong Development Bank.

The U.S. financial giant currently holds a 49% stake in the venture, China International Fund Management Co. Ltd., launched with Shangai International Trust & Investment Co. in 2004. Shanghai Pudong Development Bank acquired a controlling interest in SITICO in 2015. SPDB holds a 51% stake in CIFM.

J.P. Morgan's announcement makes the company the first to publicly say it will seek a majority stake in a money management company licensed to offer mutual funds to retail investors on the Chinese mainland, after local regulators moved last month to lift the ceiling on foreign ownership to 51% from 49%.

In a carefully worded statement, J.P. Morgan said it is "pursuing its desire and intent to increase its current joint venture stake in China International Fund Management Co. Ltd. to a majority interest, subject to agreement with its joint venture partner and the relevant authorities."

A J.P. Morgan spokeswoman declined to comment when asked whether the company's public announcement of its intent suggested an agreement with SPDB to allow the U.S. company to acquire a majority stake was already in hand.

A spokesman for SPDB couldn't immediately be reached for comment.

Mary Erdoes, J.P. Morgan's CEO, asset and wealth management, said in the news release: "Our ongoing investments in China reflect our long-term commitment to one of the largest, fastest-growing and most exciting markets in the world."

In the same news release, J.P. Morgan said its corporate and investment bank had submitted an application to the China Securities Regulatory Commission to establish "a new, fully integrated securities company in which it would hold a 51%, increasing to 100% as allowed by regulations over the next few years."

In addition, the company named Mark Leung, the firm's co-head of global equities and prime services, its CEO of China, a new position at J.P. Morgan, said the spokeswoman.

The firm's other co-head of global equities and prime services, Jason Sippel, becomes sole head of that business, the news release said.

And David Li, J.P. Morgan's senior country office for China, will take on the additional role of vice chairman of global banking.