China grants JPMorgan and Nomura approval to take controlling stakes in local securities firms
- JPMorgan Chase and Nomura Holdings get permission to set up majority-owned brokerages in China, part of an effort to open up the onshore market
JPMorgan Chase and Nomura Holdings have received approval from the Chinese securities regulator to set up majority-owned brokerage joint ventures.
The approvals, the first since December, follow an earlier pledge by mainland officials to further open the nation’s domestic securities market to foreign competition.
The two companies can each set up a joint venture with a controlling 51 per cent stake, according to an announcement by the China Securities Regulatory Commission on Friday after the market close.
Last April, Beijing announced it would lift the investment cap to allow foreign brokerages majority control of their mainland joint ventures, responding to demands by the US to open the onshore financial service market. Before the policy relaxation, holdings by foreign investors were capped at a maximum 49 per cent.
“This is an important step in building up our China business,” Nomura chief executive Koji Nagai said in a statement. “With an increased presence in China, we aim to support economic growth in both China and Japan and firmly establish ourselves as a global financial service group with deep roots in Asia.”
JPMorgan will set up its majority-controlled joint venture in Shanghai, working with Shanghai Waigaoqiao Free Trade Zone Group and four other investment firms, according to sources with knowledge of the matter.
“It’s a critical component of our growth plans globally as well as in Asia-Pacific and the progress and investments we continue to make reflect our long-term commitment to bringing the full force of our firm to the country,” Nicolas Aguzin, chairman and CEO of JP Morgan Asia-Pacific, said in a statement.
In December UBS was the first foreign bank to receive approval to proceed with its majority-controlled joint venture.
Beijing has been wary of opening up the finance and securities sectors to foreign players, amid concerns local companies would be edged out by global rivals.
So far, the 10 foreign-invested joint ventures in the securities sector account for only a small fraction of the mainland brokerage business.
Morgan Stanley’s joint venture ranked 61st in terms of revenue in 2017, while Goldman Sachs’ venture was 72nd, and UBS’s venture was 73rd, according to the Securities Association of China.
“Nearly all the biggest international players in the securities industry are in the mainland market now,” said Wang Feng, chairman of Shanghai-based financial services firm Ye Lang Capital. “All eyes will be on how the international banks play a catch-up game in the mainland market.”
Nomura said it will initially focus on the wealth management business, offering services to high-net-worth individuals.
