If China relaxes foreign ownership limits on financial firms as anticipated, Manulife Financial Corp. is keen to take controlling stakes in operations there, said Don Guloien, chief executive of the Toronto-based insurer, which already has joint ventures in insurance and wealth management.
Reports that China is considering loosening restrictions on foreign control of financial firms first emerged late last year, with fresh reports last week that the government is considering removing a 50 per cent cap on foreign ownership of insurance companies.
“That would be a very welcome development for us,” Guloien said Monday following a luncheon speech in Toronto. He said current partnership structures are working well for the Toronto-based firm and there is no rush to change them.
“We would love to be able to buy it if and when — and only if and when — our partners want to sell it,” Guloien said.
Manulife formed a joint venture insurance operation in China with Sinochem in 2002. On the wealth management side, Manulife owns a 49 per cent of China-based fund manager Manulife-TEDA.
Guloien said other opportunities might open up as China is looking at creating other vehicles to allow foreign-owned companies to work in sectors including investment and pension management.
He said Manulife’s focus in Asia is likely to be on building existing investments and establishing new ventures, rather than pursuing large acquisitions.
“We tend to be very disciplined,” Guloien said. “I see most of our opportunities in Asia… to be that of organic growth.”
Manulife does about one-third of its business in each of Canada, the United States, and Asia.
We tend to be very disciplined. I see most of our opportunities in Asia… to be that of organic growth
The insurer issued a statement Monday addressing an administrative penalty paid to FINTRAC, which monitors financial transactions to detect and prevent money laundering in Canada. The payment resulted from “administrative lapses in reporting” at Manulife Bank, a domestic financial services operation.
FINTRAC disclosed in April of 2016 that a $1.15 million penalty had been paid by a bank, but the bank was not identified.
“Manulife did not enable or facilitate money laundering,” the company said Monday, shortly after a CBC report identified Manulife Bank as the one that had paid the FINTRAC penalty. The statement said one violation involved a customer whose activities had already been reported to law enforcement and FINTRAC by Manulife.
“There is no evidence to suggest that the administrative reporting violations were connected to any financial misconduct,” Manulife said in the statement, adding that the administrative errors were “remedied in the first half of 2014.”
After his speech, Guloien told media the errors were the result of a single misinterpretation on Manulife’s part that led to continued administrative reporting violations.
“I think what happened in this case is there are two interpretations someone could take about the (FINTRAC) guidelines. We took an interpretation that was clearly wrong, or certainly not the one FINTRAC wanted us to hold, and it was repeated a number of times, which led to this large number,” he said. “But again these are strictly administrative errors. There’s no suggestion whatsoever of financial misconduct.”