January 16, 2020 / 6:27 AM / 12 days ago

Factbox: Foreign investment banks with majority stakes in China units

HONG KONG (Reuters) - The world’s biggest investment banks will be able to wholly own their China securities businesses from April 1 as the U.S.- China Phase 1 trade deal accelerates a previous deadline for removing foreign ownership caps by nine months.

International bankers believe a full ownership, or at least a majority control, would allow them to make better use of their global network to win market share in China.

China raised the cap on foreign ownership to 51% in 2018, before which international banks were allowed to hold only minority stakes in their Chinese joint ventures, which typically offer a combination of securities underwriting, broking, research and trading services.

Below is a list of major foreign banks and their stakes in Chinese joint ventures:

ESTABLISHED

** UBS became the first foreign bank to own 51% of its China joint venture under the 2018 rules. Three government-affiliated investment vehicles also hold minority stakes in the company, UBS Securities, in which UBS first invested in 2006.

** HSBC launched its own 51% joint venture in late 2017 under a different set of rules that allow Hong Kong-based companies special access to the mainland. It has partnered with Qianhai Financial Holdings, a local government investment vehicle.

FILE PHOTO: A UBS advertisement is displayed on top of a commercial building in Hong Kong, China May 2, 2017. REUTERS/Bobby Yip

RECEIVED APPROVAL

** JPMorgan received final approval from Chinese regulators in December to set up a new majority owned securities joint venture. JP Morgan Securities (China) has six shareholders, including the Shanghai Waigaoqiao Free Trade Zone Group, which owns 20%.

** Nomura received a final regulatory approval in November for its new majority owned joint venture, Nomura Orient International Securities. It has two partners, including manufacturing and services firm Orient International.

IN PROCESS

** Goldman Sachs applied for a majority ownership of its existing joint venture, Goldman Sachs Gau Hua Securities, in August 2018, though, unlike most others, it already has operational control of the company. It plans to fold some of the operations of partner Beijing Gao Hua Securities into the JV.

** Morgan Stanley purchased the 2% stake it needed to reach 51% ownership of Morgan Stanley Huaxin Securities in August. The deal still needs regulatory approval.

** Credit Suisse plans to boost its stake in Credit Suisse Founder Securities Ltd to 51% from 33.3% through capital injection, it said in April 2019. The plan is subject to regulatory approval.

FILE PHOTO: HSBC logo is seen on a branch bank in the financial district in New York, U.S., August 7, 2019. REUTERS/Brendan McDermid

PLANNING STAGE

** Citigroup plans to set up a wholly owned securities business in China after completing its exit from an existing joint venture in which it has a minority stake.

** Societe Generale intends to create a wholly owned subsidiary after ditching earlier plans for a joint venture.

Reporting by Alun John; Editing by Anil D'Silva

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