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China's first ever foreign-owned wealth management firm settles in Qingdao

2016/11/10 13:51:36   source:chinadaily.com

  The opening-up of China’s financial sector entered a new phase recently when Yicai Wealth Management Co Ltd completed its registration in Qingdao, Shandong province, becoming the first ever wholly foreign-owned wealth management company to be established in China.

  The registration of the new 146 million yuan ($21.5 million) venture marks the start of a new era for Chinese finance and the city of Qingdao, and the culmination of a long journey for Yicai's backers, Italy's largest banking group Intesa Sanpaolo.

  How Qingdao trumped the first-tier cities to attract Intesa Sanpaolo

  Qingdao proved to be the perfect fit for Intesa Sanpaolo, whose relationship with the city goes back to 2007 when the group acquired a 15-percent stake in the Bank of Qingdao.

  The coastal city is already characterized by widespread wealth, and the Italian bank believes that it has very high potential to continue growing rapidly in the coming years.

  A recent report by the Economist Intelligence Unit predicts that by 2030 Qingdao will have more than 2 million high-income residents earning more than 200,000 yuan per year, and this is also likely to lead to a surge in the number of high net worth individuals (HNWI) living in the city.

  Qingdao also offers Intesa Sanpaolo a very favorable business environment thanks to the Chinese government's recent decision to name the city a wealth management pilot zone, giving the city the freedom to introduce innovative policies in a bid to attract local and international wealth management companies.

  One senior manager from Intesa Sanpaolo shared that the bank expects Qingdao's pilot zone status to lead to more relaxed restrictions on setting up new companies in the city, more favorable new regulations, and a more open market for foreign companies within the zone.

  The pilot zone could also help Qingdao turn into a financial hub attracting HNWI customers from across mainland China, according to the senior manager.

  The city also has the advantage of providing easy access to the rest of Shandong province.

  The vision and support of the Qingdao government was also a crucial factor in Intesa Sanpaolo's decision, the senior manager added. The bank was impressed by the city's plans for the wealth management sector and its strong support for Intesa Sanpaolo's projects.

  A new generation of ultra-wealthy Chinese

  Intesa Sanpaolo is hoping that Yicai will be able to tap into the huge potential market for wealth management in China that is being opened up by the huge growth in wealthy Chinese individuals in recent years.

  China recently overtook the US as the country with the highest number of billionaires in the world, according to the Hurun Report, and the number of HNWI with investable assets of more than 10 million yuan is also likely to increase astronomically in the next two decades.

  Recent research on clients' expectations also confirms that China's nouveaux riches have a growing need for professional support to manage their financial wealth.

  Intesa Sanpaolo will aim to provide this support by drawing on its experience gained in Europe through managing a network of third-party network of financial advisors via its subsidiary Fideuram, and through its asset management company Eurizon Capital.

  Yicai will offer its clients a full range of financial consultancy services aimed at the long-term planning and management of their savings. The company will initially distribute only third-party products, both onshore and offshore, provided by strategic partners such as Penghua and Eurizon Capital.

  In addition, Yicai will provide value-added non-financial services with the support of local partners, including business consulting, advice on investing in fine art, and tax and legal advice.

  After an initial pilot phase, Yicai plans to set up a single financial advisory office in Qingdao, with the goal of gradually expanding its network of sales offices to 15 cities in the medium term, covering the most important Chinese cities such as Beijing, Shanghai, Guangzhou and Shenzhen.

  Intesa Sanpaolo's long march to Shandong

  That Intesa Sanpaolo was able to set up a wholly foreign-owned venture is a reflection of the bank's long relationship with China.

  The bank first arrived in China in 1981, when it became the first Italian credit institution to establish a presence in the country by setting up an office in Beijing to assist Italian companies investing in China and Chinese companies moving into the Italian market.

  In 2006, Intesa Sanpaolo expanded this role by partnering with China Investment Bank and the Export-Import Bank of China in the Mandarin Fund, a private equity fund set up to support businesses expanding in the Chinese and Italian markets.

  Intesa Sanpaolo's China operations have also grown into other areas over the years. The bank now runs branches in Shanghai and Honk Kong, and it also owns a large stake in Penghua Fund Management, as well as its smaller shareholding in the Bank of Qingdao.

  The bank also takes an active role in a wide range of other business and cultural initiatives, as well as numerous organizations that promote cultural, commercial, technological and scientific exchanges between Italy and China.

  The bank is active in the Italian-Chinese Chamber of Commerce and is a founding member of both the Centre of Advanced Studies on Contemporary China and the Italy China Foundation.

  However, it was the bank's 2007 decision to invest in the Bank of Qingdao that really paved the way for the establishment of Yicai Wealth Management.

  Its decision to invest in the Bank of Qingdao was based on its assessment of the city and the region in the context of China's development, the bank's potential and the quality of its management and shareholders.

  Since the initial investment, Intesa Sanpaolo has been a stable strategic partner to the Bank of Qingdao and has cooperated closely with it to support the bank's development.

  Intesa Sanpaolo's efforts have been repaid through the strong results delivered by the Bank of Qingdao during the last few years, and the Italian bank has developed fruitful relationships with all its Chinese stakeholders.

  The experience cooperating with the Bank of Qingdao also helped Intesa build up a good knowledge of the local market and a good relationship with the local authorities, which gave the group a crucial advantage when registering Yicai.

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Sponsor:Information Office of Shandong Provincial People’s Government