Scotia enters Chinese mutual fund market

Scotiabank has struck a deal with the Bank of Beijing to buy a one-third interest in a Chinese-based fund management company that has yet to be established. The 33% stake is valued at about $15 million U.S.

The joint venture still requires Chinese regulatory approval, which would clear the way for the creation of Bank of Beijing Scotiabank Asset Management Co. Ltd., according to a release from Scotiabank. The firm will design and market mutual funds to both retail and institutional investors, using the Bank of Beijing’s branch network for distribution.

“By combining the Bank of Beijing’s broad presence and strong growth with Scotiabank’s more than 175 years of international financial experience, this joint venture is ideally positioned to meet the expanding needs of China’s growing asset management market,” said Rob Pitfield, executive vice-president, international banking, Scotiabank.

The Chinese market currently consists of more than 138 million investor accounts with more than $380 billion in assets under management. The asset management market has witnessed an astounding 230% growth rate over the three years ending December 31, 2007.

“Through this joint venture with the Bank of Beijing, Scotiabank will be reaching out to more than 8.2 million Bank of Beijing customers with co-branded mutual fund products, growing our brand recognition and sharing the Scotiabank experience,” said Michele Kwok, Scotiabank’s senior vice-president, Asia Pacific and the Middle East.

Scotiabank already brands itself as “Canada’s more international bank,” as it has expanded aggressively, most notably throughout Latin America. The bank also operates in 11 countries in the Asia/Pacific region.

Scotia first opened a Beijing representative office in 1982 and has branches in Shanghai, Guangzhou and Chongqing along with its offices in Hong Kong and Taipei.

“Scotiabank is committed to growing our international wealth management platform, to meet the global needs of our international customers,” added Dan Wright, senior vice-president, international wealth management with Scotiabank.

The Bank of Beijing was established in 1996, through the amalgamation of 90 urban credit co-operatives. It has 131 offices in Beijing as well as branches in Tianjin, Shanghai and Xi’an.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(08/27/08)