According to two sources, as it expands in the world’s second-largest economy, HSBC (HSBA.L) has agreed to buy out its China fund management joint venture partner.
According to reports, HSBC, which holds 49% of HSBC Jintrust Fund Management, has negotiated with Shanxi Trust to buy the Chinese state-owned company’s 51% part in the joint venture.
The individuals, who declined to be identified because they were not authorized to speak to the media, said the transfer is subject to a public auction of the shares and regulatory approval.
If allowed, Europe’s biggest bank by assets, which earns most of its income and profit in Asia, will enter China’s $3.8 trillion fund management sector.
HSBC’s Hong Kong spokesman denied comment. Shanghai-based HSBC Jintrust and Shanxi Trust did not immediately reply to requests for comment.
According to the joint venture’s website, HSBC Jintrust had $7.7 billion in funds under administration as of end-March. However, HSBC’s purchase price from Shanxi Trust was unclear.
HSBC’s recent China expansion is their increase in fund venture ownership.
In 2021, the London-based bank made its China securities joint venture 90% owned and turned its China insurance joint venture into a wholly owned subsidiary.
HSBC’s Asia pivot has seen it invest billions in China’s $57 trillion financial industry, increasing its market share in banking, insurance, and securities.
In 2022, China (Hong Kong and mainland) made 44% of HSBC’s profit.
When HSBC CEO Noel Quinn visited Beijing in March, a top official informed him China “welcomed an expansion of HSBC’s investment in the country.”
The bank signed the China fund business agreement despite Ping An’s months-long battle to split off its Asia unit. Friday’s annual shareholder’s meeting saw HSBC repel a break-up proposal.
HSBC follows Manulife (MFC.TO), JPMorgan (JPM.N), and Morgan Stanley (MS.N) in increasing shares in Chinese fund partnerships after the 2019 foreign ownership restriction was lifted.
According to insiders, HSBC Global Asset Management, the bank’s fund management subsidiary, would hasten regulatory clearance for the ownership transition.
The sources claimed it must sell a majority share indirectly owned via its affiliate Hang Seng Bank in the 70%-controlled fund unit Hang Seng Qianhai Fund Management before approaching authorities.
China’s “One Majority, One Minority” ownership guideline limits domestic and international enterprises to two fund units and majority control of one.
