May 23, 2011

Swiss Bank Julius Baer Gets Green Light for China Fund

Qualified buyer quota of $100 million opens door for investment in capital markets

Zurich-based private bank Julius Baer announced on Monday that the Chinese government had granted it a Qualified Foreign Institutional Investor (QFII) quota that will allow it to buy Chinese stocks and bonds on behalf of investors.

Reuters reported that the quota, granted by the State Administration of Foreign Exchange (SAFE), allows the bank to have access to China's tightly controlled markets. Since 2003, SAFE has allowed quotas to such foreign firms as Citigroup, Morgan Stanley, UBS, and Goldman Sachs; together there are more than 100 financial institutions that hold QFII quotas totaling approximately $20 billion.

Baer counts both Switzerland and Asia as its two home markets, and said that it intends to launch a China fund encompassing companies listed in Hong Kong and on the mainland.

"We are in a unique position as a private bank to provide our clients with the opportunity to invest directly onshore in China, a market which is growing rapidly and offers so many interesting options for investors,” Kenneth Ho, the bank’s head of Products Asia Pacific, said in a statement.

The QFII quota “opens up increased opportunities for diversification and potentially attractive long-term returns,” Ho added.

The bank has been working to beef up its expansion in Asia, riding on the tide of China's growth and currency value. Late last year it boosted its Hong Kong operation into a full branch, and in March it added yuan conversion service, savings and deposit accounts and yuan-denominated or currency-linked investment products in Hong Kong and Singapore to its existing offshore yuan product offerings.

Baer also plans this year to open a Shanghai representative office and Singapore trust company.

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