Beijing approves Credit Suisse securities venture with Founder

Credit Suisse has gained regulatory clearance to set up an investment banking joint venture on the mainland, the first approval since the new rules on foreign investment in the mainland's securities industry took effect in January.

The China Securities Regulatory Commission announced yesterday that the Swiss bank was allowed to establish a joint venture in which it would own a 33.3 per cent stake and its mainland partner, Founder Securities, 66.7 per cent.

The approval gives the still-unnamed joint venture access to the massive but restrictive securities industry by sponsoring and underwriting deals on A shares, foreign investment shares and government and corporate bonds.

The new kid on the block will cross swords with UBS and Goldman Sachs, the only foreign institutions with jointly owned securities companies on the mainland. Morgan Stanley has a passive 34 per cent stake in leading domestic broker China International Capital Corp.

Kai Nargolwala, Credit Suisse Asia-Pacific chief executive and executive board member, said the joint venture marked a vital cornerstone in the Swiss bank's ambitious development in the region.

Pending recruitment of more investment bankers, Founder chairman Lei Jie will be appointed as chairman of the joint venture while Credit Suisse investment banking managing director Neil Ge in Shanghai will be the chief executive.