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As Wall Street Group expands its business in China, Goldman Sachs Asset Management has received preliminary approval to establish a wealth management joint venture with Industrial and Commercial Bank of China, one of China’s largest banks.
Goldman Sachs will hold 51% of the joint venture, while ICBC Wealth Management, a subsidiary of the bank, will own the remaining shares.
As the government liberalizes its tightly controlled financial system, foreign asset management companies are scrambling to take advantage of China’s huge savings pool.
BlackRock, the world’s largest asset management company, said this month that it has been approved to form a wealth management joint venture with China Construction Bank and Singapore’s state-owned fund Temasek.
China’s wealth management products are usually distributed through domestic banking networks, which has led to the establishment of partnerships between foreign asset management companies and local banks. The industry is regulated by the China Banking and Insurance Regulatory Commission (CBIRC).
Tuan Lam, Head of Client Business Outside Japan, Asia Pacific, Goldman Sachs Asset Management, said: “China’s wealth management industry has developed under the continuous impetus of increasing household wealth and financial market reforms.”
He added: “Joint ventures with well-known Chinese financial institutions will accelerate our goal of establishing a leadership position in one of the world’s largest and fastest-growing wealth management opportunities.”
Goldman Sachs said that the partnership has received preliminary approval from the China Banking Regulatory Commission.
Its global investment research organization estimates that by 2030, Chinese households will have investable assets of more than 7 billion U.S. dollars, of which more than half will be allocated to products such as securities, mutual funds and wealth management products.
French asset manager Amundi partnered with Bank of China last year to become the first foreign company to launch a foreign-funded majority wealth management business. Elsewhere, JPMorgan Asset Management announced plans to acquire its mutual fund joint venture partners last year.
China’s government reforms encourage foreigners to participate more in financial services, including allowing foreign companies to fully own mutual fund operations for the first time.
Goldman Sachs said in December that it would seek full control of its joint venture, which dates back to 2004.
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