BNP Paribas joins China wealth market race with new approval

Bloomberg

BNP Paribas SA has won approval to set up a wealth-management joint venture in China, adding competition to global rivals including BlackRock Inc. and Amundi SA vying for a slice of the $4 trillion market.
China’s banking regulator has granted permission for the French lender’s asset-management arm to form the venture with the wealth unit of Agricultural Bank of China Ltd. BNP Paribas Asset Management will hold a 51% stake.
BNP Paribas Asset “confirms that it has filed for a license” to establish the venture with the Chinese lender, the company said in an emailed statement, declining to comment further.
Global banks are racing to tap the potential in China’s wealth-management market by forming partnerships with its biggest lenders to leverage their sprawling distribution networks. Amundi’s joint venture with Bank of China Ltd. already oversaw about $11.6 billion in assets as of June 30 after becoming the first international firm to launch such a business in 2020.
“The move by BNP Paribas shows that global interest in the Chinese wealth space remains firmly intact, although history shows that ease in access to distribution isn’t a guarantee for success,” said Peter Alexander, managing director of Shanghai-based consultancy Z-Ben Advisors Ltd. “Partnering with a bank is viewed by global managers as the ‘easiest’ choice in that the banks have the largest access to idle deposits.”
China started an overhaul of its asset-management industry in 2018, banning guaranteed returns and other irregularities to curb risks. Banks were required to set up new units to specialise in wealth-management products, before global firms were ushered in to form partnerships.
BNP Paribas, which posted its highest profit on record in the second quarter, also owns a mutual-fund joint venture in China with Haitong Securities Co. The asset-management unit managed about $490 billion as of June 30.
The market has proved tricky to the early entrants despite the potential. Chinese retail investors, who are used to guaranteed returns on the wealth products, have criticized Amundi for falling short of performance targets, while local press have highlighted some of BlackRock’s offerings are making losses.
BlackRock’s venture with China Construction Bank Corp. has raised more than 7 billion yuan with five products. Goldman Sachs Group Inc. and Schroders Plc have also won licenses for their partnerships.