(Yicai Global) March 22 -- Global assets management giant JPMorgan Asset Management Asia Pacific will buy a 10 percent stake in CMB Wealth Management for CNY2.7 billion (USD415 million).

China Merchants Bank, one of the country’s major banks which wholly owns CMB Wealth Management, announced the strategic investment after the market closed on March 19.

On completion of the transaction, CMB Wealth Management is expected to become the first wealth management arm of a Chinese bank to bring in overseas strategic investors. CMB will have 90 percent stake in the joint venture, with JPMorgan Asset Management holding 10 percent, the announcement said.

CMB Wealth Management has brought in JPMorgan Asset Management as its strategic investor, hoping to draw on the latter’s experience in fintech, investment research and risk management, CMB said in the announcement.

This will help its subsidiary to diversify its wealth management products, improve operation and management ability and enhance its market influence, the bank added.

Formed in November 2019, CMB Wealth Management specializes in issuing public and private wealth management products and providing wealth management consulting services.

It reported CNY3.8 billion in operating revenue last year, 92 percent of which came from products under entrusted management of its parent CMB. It also posted CNY2.5 billion in net profit, according to CMB’s annual earnings report published on March 19.

This is not the first cooperation between CMB and JPMorgan Asset Management. In December 2019, the two sides announced a partnership to develop products, train investors and seize new opportunities in the industry as well as explore the fintech business. The partners released their first wealth management product in July 2020.

China is accelerating the opening-up of its financial sector and encourages foreign companies to form and invest in wealth management subsidiaries.

Wealth management arms of several banks and foreign asset management companies have set up joint ventures, but CMB Wealth Management is the first JV between a Chinese bank and a foreign firm.

Editor: Peter Thomas