September 22, 2008
BANK of China said yesterday it will buy a 20 percent stake in La Compagnie Financiere Edmond de Rothschild for 236.3 million euros (US$340 million) and the two will develop private banking and asset-management services.
“This partnership forms part of Bank of China’s global development strategy,” Bank of China chairman Xiao Gang said in a statement. “We expect to further strengthen our asset management operations and product design capabilities in private banking business, and widen the product and service offerings to our clients.”
Beijing-based Bank of China said it sees a promising future for private banking and other services for China’s newly affluent amid rapid economic growth.
“With the rapidly growing global demand for wealth management services, private banking and asset management are becoming increasingly important parts of the Chinese financial services industry,” the statement said.
Bank of China said it hoped the deal would strengthen its presence in Europe. China’s top banks are among the world’s largest in financial terms but inexperienced at consumer services. They have formed ties with foreign partners to introduce credit cards and other products.
Bank of China and LCFR said they also would cooperate in developing services outside China and France.
Bank of China is the country’s No. 3 commercial lender by assets but has its biggest foreign exposure. It said the latest deal was the first of its kind by a Chinese bank in an economy that uses the euro currency.
The deal expands Bank of China’s European ties just two months after it bought 30 percent of Swiss-based Heritage Fund Management SA in July for 60 million yuan (US$9 million).
Founded in 1953, LCFR is controlled by the Rothschild family, which has a 250-year history in European banking. LCFR says it has nearly 30 billion euros (US$45 billion) under management.
LCFR chairman Benjamin de Rothschild, quoted in the Bank of China statement, said: “This agreement opens up a new era of development for La Compagnie Financiere Edmond de Rothschild in the tradition of innovation and international expansion of our group.”
This article was posted: Monday, September 22, 2008 at 10:04 pm