bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

CSRC regulation requiring IPO sponsors to have two qualified bankers could spark staff poaching

China yesterday   listed the names of the first  group of individuals and financial institutions that have qualified as sponsors of domestic share offerings in a regulatory move to improve market quality and underwriter accountability.

Analysts warned, however, that the new system - borrowed from  Britain and Hong Kong - threatened to unleash a poaching war between mainland brokerages for seasoned investment bankers licensed to sponsor share sales.

After yesterday's  China Securities Regulatory Commission (CSRC) announcement, all candidates for  new mainland initial public offerings and secondary share sales must hire a qualified financial institution as a sponsor.

A financial institution must have at least two investment bankers who have passed the relevant exam and won CSRC approval as individual sponsors of share offerings in order to acquire a licence to sponsor share sales.

The CSRC yesterday said it had licensed 66 mainland brokerages and China Huarong Asset Management as the first batch of institutional listing sponsors.

In line with earlier market expectations, dominant  brokerages are home to most of the 609 newly  named individual listing sponsors.

The disparity is wide. While 33 investment bankers  qualified at Guangzhou-based Guangfa Securities, 12 brokerages  and two  other state-owned asset management companies failed to obtain  institutional listing sponsor status  because they had only one banker licensed as an individual sponsor.

The sponsorship system is set to replace - perhaps within months - the 'channel mechanism'.

Under the channel system, which attempts to prevent the regulator from being flooded with share issue applications and help even the weakest investment banks earn some underwriting fees, more than 100 brokerages are  allowed to have two to eight share-sale applications that they underwrite pending  at the CSRC at the same time.

Under the new system, individual bankers who could sponsor share sales would be valuable assets, China Southern Securities investment banker Shen Zhuang said. Two qualified bankers must be appointed to each deal.

'Some investment banking staff turnover is inevitable,' said Tang Yong, a trader at Xiangcai Securities in Shanghai.

To address this concern, the CSRC said  it would require individual sponsors to re-apply for licences if they switched employers.

China International Capital Corp and BOC International (China), the country's two earliest foreign-invested investment banks  with Morgan Stanley and Bank of China International respectively as major shareholders, each has just three investment bankers licensed as individual sponsors.

Two infant joint-venture investment banks - China Euro Securities partly owned by CLSA and Changjiang BNP Paribas Peregrine Securities with BNP Paribas Peregrine as foreign shareholder - each has eight individual bankers qualifying as listing sponsors.

The two younger foreign-invested banks had taken over their Chinese partners' investment banking personnel, giving them a greater familiarity with the mainland, a Shanghai executive noted.



Institutions face scramble for talent