Foreign partners consider next steps for Chinese securities JVs

• Published in: Euromoney 2017-11
• Main Author: Wright, Chris
• Format: Article
• Language: English
• Subjects: Banking industry; Banks; Bond markets; Equity stake; Institutional investments; Joint ventures
• ISSN: 0014-2433

On Friday November 10, vice-finance minister Zhu Guangyao told a Beijing briefing that foreign firms will be allowed to own up to 51% of securities ventures and life insurance companies, and that the cap will be steadily removed in future. Christine Lam, China CEO at Citi, said: “We welcome any government moves to further liberalize the financial markets,” but did not say if Citi would increase its stake in its venture with Orient Securities, instead preferring to highlight other licences Citi has gained in its own right in the mainland over the last year, including a Type A bond settlement agent licence for the interbank bond market in February, selection as a Bond Connect Trading Dealer by the People’s Bank of China in July, and a bond underwriting licence from the National Association of Financial Market Institutional Investors to underwrite corporate bonds in China’s interbank bond market. Eugene Qian, chairman of UBS China Strategy Board and member of the Asia Pacific Executive Committee, says in a statement that “China is a key market for UBS and, as indicated previously, we continue to work towards increasing our stake in UBS Securities Co Ltd.” That’s not quite the same as saying it’s going to move to a majority stake – a spokesman says: “We plan to increase our stake but have not indicated to what level” – and it is not clear if the structure as originally set in 2006, when UBS became the first foreign bank to invest directly in a fully licensed domestic securities firm, gives a clear path to control or a requirement for other shareholders to sell if asked. “HSBC welcomes the changes announced today regarding foreign ownership in the financial services sector,” says Peter Wong, deputy chairman and chief executive of the Hongkong and Shanghai Banking Corporation Limited (that is, the business domiciled in Hong Kong), in a statement.