The Bank of China, the world’s fifth largest bank, is to buy a 20-percent stake in La Compagnie Financiere Edmond de Rothschild for 236 million euros (US$342 million).

Bank of China Vice President Zhu Min and Compagnie Financiere Edmond de Rothschild Chairman Michel Cicurel sign agreements in Paris, September 18, 2008. [Xinhua]

Compagnie Financiere Edmond de Rothschild, the French fund-management unit of privately-held bank LCF Rothschild Group, and Beijing-based Bank of China are to begin an asset-management and private-banking venture to sell Rothschild's financial products through the Chinese lender's 10,800 branches, Bloomberg News said.

"Chinese banks are performing in a marvelous way in the current maelstrom that is shaking the global finance," Compagnie Financiere Edmond de Rothschild Chairman Michel Cicurel said at a press conference in Paris.

"Bank of China is perfectly positioned to accompany China's growing middle class" as the lender has more than 20 million accounts of individuals with at least US$100,000, he said.

Compagnie Financiere Edmond de Rothschild "had no need for cash" as it completed the deal, Cicurel said.

Bank of China is buying a 10 percent stake from Caisse de Depot et Placement du Quebec, a Canadian pension fund, and the rest will be new shares.

Benjamin de Rothschild, chairman of the supervisory board, will keep a 75 percent stake in LCF Edmond de Rothschild and Bank of China will be the second-largest shareholder in the asset-management company.

The firm managed 29.6 billion euros in assets at the end of 2007.

Bank of China "expects that the transaction will provide a reasonable return on investment," the Chinese lender said in a statement to Hong Kong's stock exchange.

"The bank can further explore opportunities in European and other emerging markets."

Bank of China Vice President Zhu Min also said the company wasn't ready to acquire a major United States investment bank.

While "very volatile markets present opportunities to buy others, I don't think we have the capability to do that today," Zhu told reporters in Paris.

The bank is still looking at its domestic market for expansion, he said.

Compagnie Financiere Edmond de Rothschild, which started operations in Shanghai two years ago, is one of the latest international fund managers to start operations in the country to tap growing personal incomes and sovereign wealth funds.

(Shanghai Daily September 20, 2008)