JPMorgan Acquires 10 Pct Stake In China Merchants Bank For $410 Million

The asset-management division of J.P. Morgan Chase & Co. is paying $410 million for a 10 percent stake in the state-owned China Merchants Bank, The Wall Street Journal reported on Friday (March 19).

China Merchant Bank is the country’s top wealth-management firm. The 10 percent stake still needs the nod from Chinese regulators. The move is significant, as this is the only time a bank in China has been open to letting a foreign investor have any control over a wealth management subsidiary.

J.P. Morgan Asset Management and China Merchants Bank partnered two years ago to advance the development of new products as well as financial literacy.

“We hope that the strong alliance will contribute to the opening up of China’s financial industry,” Liu Hui, executive assistant president of China Merchants Bank and chair of the group’s wealth subsidiary, told WSJ.

The Shenzhen-based bank is among China’s biggest commercial lenders. Its subsidiary for wealth management controlled roughly $377 billion by the end of last year, a 12 percent hike over 2019, according to WSJ, citing the bank’s annual report.

Headquartered in the Futian District in Shenzhen, China Merchant Bank was founded in 1987. It is the country’s leader in wealth-related business, according to Citigroup analysts in January. The bank said at the time that it gets more revenue from its wealth management division and also handles more assets for individual investors than any of the other banks it currently covers.

The asset management sector in China has experienced a 10-times increase from 2009-2019, hitting $16 trillion, WSJ reported, citing the World Economic Forum and Oliver Wyman.

The Chinese robo-adviser service BangNiTou reached one million users on Wednesday (March 17). Backed by Vanguard and Ant Group, BangNiTou has engaged investors with its roughly $122 minimum buy-in. After making an assessment of a user’s investment goals and risk aversion, BangNiTou makes recommendations from a selection of 6,000 mutual funds.