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Allianz is in talks with banks about a joint venture to manage assets in China

Image: Reuters Berita 24 English - Two people with direct knowledge of the situation said that Allianz SE is in talks with Chinese banks to ...


Image: Reuters

Berita 24 English - Two people with direct knowledge of the situation said that Allianz SE is in talks with Chinese banks to set up a majority-owned asset management venture in the world's second-largest economy. The goal is to tap into a $4.3 trillion market for wealth products.

People say that Allianz Global Investors (AllianzGI), the main asset management arm of the German insurance company, has been in talks with lenders like Industrial Bank and China CITIC Bank over the past few months.

AllianzGI is the latest foreign asset manager to try to get a piece of China's lucrative wealth management market.

China started letting foreign companies set up majority-owned wealth management joint ventures with local banks' wealth units in 2019. Since then, BlackRock, Goldman Sachs, and Barclays have all found local partners or are working to do so.

But the rush has made people wonder if there are enough good local partners for asset managers to work with.

"This year, the competition to buy a local bank got tougher because there aren't many big banks left for foreign companies to buy," said one of the people. At least one more foreign asset manager is also in talks with CITIC Bank about a joint venture.

AllianzGI said it was committed to the China market, but it wouldn't say what its plans were.

Both sources refused to give their names because they were not allowed to talk to the press.

A person in the news department at Industrial Bank said he didn't know about the talks. Citic Bank couldn't be reached right away to get their opinion.

As of the end of 2021, the wealth management units of the two banks had assets worth 1.8 trillion yuan ($263.20 billion) and 1.4 trillion yuan, respectively.

FUND MANAGEMENT UNIT

Allianz's plan to grow in China comes at a time when the Chinese economy is slowing down and almost went into recession in the second quarter. Widespread COVID-19 lockdowns and a real estate crisis hurt consumer and business confidence in the country and made it harder to make money.

Western asset managers, on the other hand, bet that China's financial sector will grow in the long run.

Two people said that AllianzGI, which manages assets worth 578 billion euros ($574.5 billion), is also moving forward with a separate plan to set up a fully owned fund management business in China.

One of the sources said that it has hired Mckinsey & Company to study whether this project is possible.

According to official data, the market for managing funds in China is worth $3.7 trillion.

At the moment, the insurance company has a 49% stake in a joint venture with a part of China Pacific Insurance that manages funds. One of the sources said that the company wants to start a separate business that it owns all by itself because it couldn't buy out its partner.

When Reuters asked Allianz for a comment, the company did not answer right away. Mckinsey refused to say anything.

People say that AllianzGI has started to hire operational staff in the past few months to get ready for setting up the wholly owned fund management unit.

Allianz has other businesses in China besides the existing fund management joint venture. These include life insurance and insurance asset management, both of which got regulatory approval in July of last year.

($1 = 6.8388 yuan)


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