BMO buys 20% of Chinese financial firm COFCO
Canadian lender takes largest stake allowed under Chinese rules
The Canadian Press
Posted: Feb 20, 2012 8:29 AM ET
Last Updated: Feb 20, 2012 12:05 PM ET
The Bank of Montreal says it has a definitive agreement to acquire a 19.99 per cent interest in China's COFCO Trust Co. for an undisclosed price.
BMO says it will expand its presence in China with the 19.99 per cent stake in the subsidiary of state-owned COFCO Group — the biggest stake allowed under foreign ownership rules in China.
Terms of the deal were not disclosed. COFCO Trust Co. was established in 2009 and has assets under management of $5.7 billion US.
BMO plans to help the Chinese firm develop a wealth management segment.
The bank says the investment will extend its growth strategy in Asia and provide it with more opportunities in the rapidly growing wealth management market.
"As we looked to expand BMO's offering to high net worth and institutional clients in China through a local partner, COFCO Trust emerged as the perfect choice," said Gilles Ouellette, president and CEO of BMO Financial Group's Private Client Group and Chairman of BMO ChinaCo.
"We have a decades-long relationship with COFCO Group through our role in financing Canadian wheat sales to China. Ning Gaoning, Chairman of COFCO Group said the firm is pleased to deepen its relationship with the Canadian bank.
"We are looking forward to a fruitful partnership to create value in China's fast-growing financial services market, as well as to assist the Chinese financial enterprises in their efforts to improve and globalize their professional services," he said.
The deal is subject to approval from the China Banking Regulatory Commission and the Office of the Superintendent of Financial Institutions of Canada, as well as to other customary closing conditions.
BMO already has a subsidiary bank operating in China Bank of Montreal (China) Co. Ltd., which has branches in Beijing, Guangzhou and Shanghai.
BMO also has branches in Beijing and Hong Kong, and a representative office in Taipei, Taiwan.
In addition, BMO established an investment banking representative office in Beijing and has a 28 per cent equity interest in fund management company Fullgoal Fund Management Co.
Beijing-based COFCO Trust provides trust products to institutions and high net worth clients in China. It has 60 employees.
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