Goldman Wins Regulatory Approval To Launch Chinese Wealth Management Business

Ever since China started allowing American money managers access to the hundreds of millions of middle class Chinese investors and savers via “joint ventures” with domestic firms, some of the biggest US buy-side firms, including BlackRock and Vanguard, have already launched their Chinese operations.

And now, after months of cajoling local regulators, it appears Goldman Sachs has just won approval to launch a wealth management venture of its own alongside ICBC, one of China’s largest banks, the FT says.

So pretty soon, the Chinese elite will have the opportunity to join their American peers by becoming Goldman clients.

GSAM, Goldman’s asset-management arm, will hold a 51% stake in the venture, while ICBC wealth management, a subsidiary of the bank, will own the rest. Goldman’s move comes just weeks after BlackRock announced that it had received permission to launch a wealth-management venture alongside China Construction Bank and Singapore’s sovereign wealth fund, Temasek.

Typically, wealth management products in China are sold through networks of domestic banks, though tech firms have tried to disrupt this (something the government is now pushing back on).

The industry is regulated by the China banking and insurance regulatory commission, CBIRC, which has given its preliminary approval to the partnership, according to Goldman.

“China’s wealth management industry has grown on the back of increased household wealth and continued financial market reform,” said Tuan Lam, head of the client business for Asia Pacific ex-Japan at Goldman Sachs Asset Management. “This joint venture with China’s pre-eminent financial institution will accelerate our objective of establishing a leadership position in one of the world’s largest, fastest-growing wealth management opportunities,” he added.

Goldman’s global investment research arm estimates that investable assets by Chinese households will exceed $70tn by 2030, more than half of which will be allocated to products such as securities, mutual funds and wealth management products.

A report from Boston Consulting Group and China Everbright Bank showed that China’s wider wealth market was worth Rmb121.6 trillion ($18.9 trillion) in 2020, up 10% from a year earlier.

China has reformed its financial services industry to allow greater foreign involvement, including allowing foreign companies to own mutual fund businesses fully for the first time.

French asset manager Amundi became the first foreign company to launch a majority foreign-owned wealth management business last year when it partnered with the Bank of China, while JPMorgan’s asset management business has unveiled plans to buy out its domestic partner in its mutual fund joint venture.