New | Here’s why more consolidation is likely among MPF providers

The Mandatory Provident Fund market is likely to see more mergers as smaller companies struggle to compete with the giant players in the market.

The latest Gadbury Group MPF market share report shows large companies dominate the rankings, as they embrace the idea that growth through acquisition can bring long term benefits.

A prime example, US financial firm Principal has risen to the No. 5 spot with a 6.3 per cent market share after its acquisitions of AXA’s MPF business is completed in September. Before the deal, Principal stood in eighth and AXA at tenth, each with a nearly 3 per cent market share.

The merger helped Principal to leapfrog ahead of what were bigger competitors, including Bank Consortium Trust in the No. 6 spot, Sun Life in No. 7, and Fidelity at No. 8.

The 19 MPF providers collective manage HK$561 billion on behalf of 2.5 million employees.

Another merger is underway. Standard Chartered in September said it was selling its MPF and other pension business to insurer Manulife Financial. This deal will have little impact to the ranking table because Manulife is already the second biggest provider with a 19.1 per cent market share. The top spot is dominated by HSBC and its subsidiary Hang Seng Bank, which have a combined 29.3 per cent share of the market.