Foreign banks set to own 51pc stake in China
HONG KONG: China plans to allow global banks to take a stake of up to 51 per cent in their onshore securities ventures for the first time and tie up with local nonfinancial firms, said people familiar with the matter.
The move, if implemented, would form a key part of China’s pledge to ease foreign ownership curbs and would allow banks, including Credit Suisse, Goldman Sachs, JPMorgan and UBS, to bolster their presence in securities business — from underwriting to trading — in the world’s second-largest economy.
Currently, Western banks can only own up to 49 per cent of their Chinese brokerage joint ventures. That lack of control and limited contribution to revenue have long been a source of frustration.
The plan to ease ownership restrictions comes as Beijing faces mounting pressure from Western governments and business lobbies to remove investment barriers and onerous regulations that hobble foreign firms from operating in its markets.
China Securities Regulatory Commission officials have informally allowed some foreign banks to work on their onshore strategies with the planned easing of equity holding restrictions in mind, said two of the people.
The details of the plan to give majority control to foreign banks are expected to be finalised and announced once approved by the state council, they said, declining to be named due to the sensitivity of the issue.
News of Beijing’s possible easing of ownership restrictions in the securities sector comes as the United States President Donald Trump is in China as part of his five-nation Asia trip.
Trump’s visit to China comes amid frustration in parts of the US business community, including finance, over discriminatory Chinese policies and market access restrictions in various sectors.
“We continue to evaluate viable options to strengthen our position in China in order to better serve our clients,” said a spokeswoman for JPMorgan, which in December sold its 33 per cent holding in a China securities venture to its local partner.