Banking & Finance

Credit Suisse joint venture wins securities broking licence in Qianhai

Swiss bank teams up with Founder Securities with a view to launching securities broking services in the Shenzhen development zone early next year

PUBLISHED : Thursday, 26 November, 2015, 7:20pm
UPDATED : Thursday, 26 November, 2015, 7:28pm

Credit Suisse Group has gained regulatory approval to provide securities brokerage services through a joint venture in Shenzhen’s Qianhai development zone, the first foreign firm in years to get clearance to trade shares on behalf of mainland clients.

The announcement comes just weeks after HSBC Holdings said it planned to launch a majority-owned securities house, also in the Qianhai zone.

The joint venture with Founder Securities would add securities brokering to the equity deals and corporate bond underwriting it launched after entering the venture in 2007. Credit Suisse owns 33.3 per cent of the company, called Credit Suisse Founder Securities, or CSFS, and Founder owns the remaining stake.

The Zurich-based bank said in a statement on Thursday that it was setting up its trading outlet in Qianhai and was expected to launch services early next year.

Goldman Sachs Group launched a joint-venture investment bank with a securities broking permit more than a decade ago, the first foreign bank to do so. UBS Group followed suit but new joint ventures were frozen between 2006 and late 2007.

The business permit issued by the China Securities Regulatory Commission would allow the bank to expand its services only within the Qianhai zone. A non-compete clause in the agreement with Founder restricts CSFS to business in the zone but it would also look to serve international investors with China market services via mainland China’s cross-border investment schemes.

Earlier this month, HSBC said it had entered an agreement with Shenzhen Qianhai Financial Holdings to launch a securities brokerage in Shenzhen in which it would own a majority stake. The bank’s management at the time said it would not be limited to the Qianhai zone although that business was still awaiting regulatory approval.

The move was part of a major push from HSBC to reinvest risk-weighted assets from slow-growth markets into emerging economies in Asia, with a focus on the Pearl River Delta, where Qianhai is located.

Credit Suisse’s expansion of business on the mainland was also part of an Asia-focused growth plan announced in October. The bank will seek to double pre-tax income and client assets in the Asia-Pacific region by the end of 2018.

Asia-Pacific pre-tax income hit 1.1 billion Swiss francs, up 48 per cent year on year in the first nine months of the year but net income for the group as a whole in the third quarter fell 24 per cent.