UBS in Talks With China Life
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UBS is reportedly in talks with insurance giant China Life to form an asset management joint venture.
UBS is in discussions with China Life to form an asset management joint venture in the mainland, according to a report citing unnamed sources. The two have signed a memorandum of understanding and a formal launch will be subject to approval from the China Banking and Insurance Regulatory Commission (CBIRC).
Under the agreed deal, if finalized, UBS will hold a majority stake in the business unit which will make it the first foreign majority-owned asset management joint venture with an insurer since such partnerships were allowed in 2019. The scope of operations at the planned joint venture has also not yet been finalized.
The move to secure a joint venture with China Life follows failed attempts to form a similar asset management joint venture with a wealth management unit of a Chinese state-owned bank, the report said. «UBS has been keen to take an absolute-controlling status in a China unit, but its competitors are quick to snap up the best local partners,» said one of the unnamed sources.
UBS currently has exposure in an onshore Chinese asset management business via a 49 percent stake in UBS SDIC Fund Management which has 149 billion yuan ($23.4 billion) in retail fund assets as of November 18.
Questions & Answers
Q.What entity needs to approve the proposed joint venture between UBS and China Life?
What entity needs to approve the proposed joint venture between UBS and China Life?
The formal launch of the asset management joint venture will be subject to approval from the China Banking and Insurance Regulatory Commission (CBIRC). This is a necessary step before the deal can proceed.
Q.What is the significance of UBS holding a majority stake in this new joint venture?
What is the significance of UBS holding a majority stake in this new joint venture?
If finalised, UBS holding a majority stake would make it the first foreign majority-owned asset management joint venture with an insurer since such partnerships became permissible in 2019, marking a significant development.
Q.Has UBS attempted to form similar partnerships in China previously?
Has UBS attempted to form similar partnerships in China previously?
Yes, UBS has made prior attempts to form a similar asset management joint venture. These earlier efforts involved a wealth management unit of a Chinese state-owned bank, but they were unsuccessful.
Q.Does UBS already have a presence in the onshore Chinese asset management business?
Does UBS already have a presence in the onshore Chinese asset management business?
Yes, UBS already has exposure in the onshore Chinese asset management business. It holds a 49 percent stake in UBS SDIC Fund Management, which manages 149 billion yuan in retail fund assets.