Citibank (China) is striving to expand its distribution platform on the mainland some four months after launch, having set itself the goal of signing seven local mutual fund firms by the year's end.
Although the China Securities Regulatory Commission (CSRC) passed rules permitting foreign firms to distribute mutual funds onshore at the end of 2011, the first licences were only handed out this June.
Citibank, one of the first recipients, partnered Invesco, Manulife and Bank of Montreal through their joint-ventures in July – Invesco Great Wall, Manulife Teda Fund Management and Fullgoal Fund Management.
“We are now in talks with six-to-seven other business partners,” says Ricky Lin, head of Citibank (China)’s retail banking business, tells AsianInvestor. He declined to name them.
The strategies of Invesco Great Wall, ManulifeTeda Fund Management and Fullgoal Fund Management invest in fixed income – both sovereign and high-yield – equities and money-market instruments.
Citibank plans to add similar strategies to the platform, with Lin citing a preference amongst the local retail community for domestic offerings. “We are aware that investors tend to be home-biased on allocating investment resources,” he says, noting they are more familiar with their home market.
Lin says Citibank will target the “high-net-worth and emerging affluent groups that are growing in tandem with economic development in China”, as opposed to retail, which is a distribution arena dominated by the big four domestic banks.
Citibank, which holds a licence for the qualified domestic institutional investor (QDII) programme, also distributes offshore funds to the Chinese retail community.
Citibank has 52 consumer bank outlets in China in 13 cities, from 27 in 2008. Out of these, 21 are in Shanghai and Beijing, which combined account for over 50% of the nation’s entire retail wealth.