A senior Amundi executive said his firm was determined to move quickly in pursuing the opportunities it anticipated from the new framework China's regulators are putting in place now for the asset management activities of local banks and insurance companies.
"The Chinese asset management market and regulation are evolving fast and Amundi wants to be ready to seize all opportunities of development whatever the format," said Xiaofeng Zhong, Amundi's Hong Kong-based CEO, North Asia, in an emailed response to questions.
On Dec. 20, Amundi became the first foreign money manager to forge an asset management tie-up with a local bank — Bank of China — in a new regulatory framework overseen by the China Banking and Insurance Regulatory Commission, taking a 55% stake in a joint venture with the Beijing-based bank's recently launched asset management subsidiary, BOC Wealth Management Co. Ltd.
Chinese regulators over the past year or more have pushed local banks to set up asset management subsidiaries to better insulate their balance sheets from trillions of dollars of opaque "wealth management products," with the goal of shifting those assets into more transparent asset management products.
Further regulatory reforms announced in July invited foreign money managers to participate in the building of the banks' asset management capabilities.
At more than 22 trillion yuan ($3.2 trillion), the scale of those bank wealth management assets is more than 50% larger than the mainland's retail, mutual fund-focused fund management market.
Mr. Zhong said Amundi and Bank of China were determined to move quickly. Both "understood the potential of the new framework regarding wealth management joint ventures and were eager to implement it fast," he said.
And that, said Mr. Zhong, was in line with Amundi's main strategy "to develop partnerships and joint ventures with major domestic institutions to access broad client pools and benefit from powerful distribution channels."
BOC Wealth Management, the wholly owned arm of Bank of China that Amundi formed a separate joint venture with, was launched July 1 and at the end of September had 1.2 trillion yuan in assets under management.
In China's long-established fund management market, Amundi has a 33.33% stake in ABC-CA Fund Management Co. Ltd., a Shanghai-based joint venture with Agricultural Bank of China, Beijing.
Amundi's Dec. 20 announcement said the Paris-based firm responded favorably to the "proposal by Bank of China for Amundi to become the majority shareholder of a new asset management joint venture." Mr. Zhong said China's new regulatory framework for the bank asset management segment looks to "encourage a stronger contribution from global asset managers in terms of know-how and expertise."
Mr. Zhong said the joint venture will start "with entirely new products and no initial assets," developing its business in a way that complements BOC Wealth Management's own offerings.
The joint venture "will play a role of engine for the development of Bank of China's wealth management activities through close coordination with BOC Wealth Management and efficient support to BOC retail network with adequate investment solutions and adapted marketing tools and services," he added. Amundi will also help in areas such as investor education and risk management, he said.
While Amundi's joint venture is with Bank of China's asset management subsidiary — effectively a subsidiary of a subsidiary — Mr. Zhong said BOC Wealth Management won't set up similar joint ventures with other partners. "There will be an exclusivity with Amundi for this type of entity," he said.
Initial areas of expertise of the joint venture could include local multiasset and equity products, said Mr. Zhong. "Depending on the product design, the joint venture may consider (including) investments in overseas stocks and bonds but this will be limited considering the current status of the Chinese regulation on overseas investment," he said.