The plan for an asset management joint venture (JV) between UBS and China Life Insurance Group is facing roadblocks after a corruption probe at the insurer hampered the talks, reported Reuters.   

In addition to the investigation, the certain limitation set on the scope of the business has affected the plan, according to unnamed sources with knowledge of the development.

The Swiss bank initiated its negotiations with China Life’s asset management arm in late 2020 to set up a venture to manage money primarily for retail investors, the report said.

The sources said that the discussions between both companies are currently staggering even though it is not yet officially called off.

In January this year, China’s corruption regulator launched an investigation on China Life Insurance Group chairman Wang Bin.  

The development led to a review of several proposed deals under Bin’s leadership, including UBS’ plans for JV, the sources said. 

The sources added that talks cooled off also due to overestimation of the scope of such asset management ventures.

UBS, which was a majority stake in the planned JV, was initially planning to tap China Life’s insurance agents to distribute the venture’s wealth management products (WMPs).

However, its plans were quashed by a new rule issued by Chinese regulators last year in connection with the sale of such products.

Under the new regulation, only lenders and other deposit-taking financial institutions are permitted to sell WMPs in the country.

Spokespersons for UBS and China Life did not comment on the news.

The news comes as a host of financial institutions vie for a bigger share of China’s $15.70trn asset management space.

Last month, BlackRock’s China wealth management JV secured regulatory approval for distributing wealth management products for pension.

In January, Canadian asset manager IGM Financial revealed plans to double its stake in China Asset Management Co through its subsidiary Mackenzie Financial.