Goldman Sachs plans to double workforce in mainland China within five years as US bank seeks control of brokerage venture
- Expansion would be contingent on Goldman eventually taking full control of its Chinese security brokerage joint venture
- News of planned expansion comes as US investment bank seeks to improve its profitability, stock performance
Goldman Sachs plans to double its workforce in China in the next five years, increasing its headcount on the mainland to as many as 600 people, according to a person familiar with the US investment bank’s hiring plan.
The expansion would be contingent on Goldman receiving majority control and eventually full ownership of its security brokerage joint venture on the mainland, as well as Beijing continuing to further open up its financial markets, said the person, who was not authorised to discuss the matter publicly.
Further escalation in the US-China trade war also could cloud the expansion, the person said. Goldman declined to comment when contacted by the Post. Bloomberg News earlier reported the potential headcount expansion yesterday.
Goldman applied to the China Securities Regulatory Commission (CSRC) last August to take majority control of its venture known as Goldman Sachs Gao Hua Securities, seeking to raise its stake to 51 per cent from 33 per cent. A decision by authorities is expected later this year, people familiar said.
The hiring push on the mainland is part of the US bank’s new five-year plan in which Chief Executive David Solomon is looking to improve its profitability and share price performance.
Earlier this month, the bank restructured its reporting segments as it seeks to give investors more clarity on how it generates revenue. The segments are investment banking, institutional client services, investment management and consumer and wealth management.
The US state caught between China and the White House
Goldman opened a consumer banking unit in 2016 called Marcus, named after the bank’s founder Marcus Goldman, but it has struggled with profitability. It also developed a credit card with Apple, which debuted in August. The bank also is looking to expand its wealth management business as it seeks to broaden its revenue streams.
The potential of further opening up the mainland financial markets has been enticing for US and European banks, including Goldman.
Beijing has said it would undertake a series of measures to further open up the financial sector, including removing shareholding limits on foreign ownership of securities, insurance and fund management companies this year, a year earlier than planned.
Trade war to weigh less on Asian economies, earnings to drive markets
The move came against the backdrop of a trade war that has raged between the US and China for 18 months.
US President Donald Trump has placed tariffs on hundreds of billions of dollars of Chinese-made goods in hopes of forcing Beijing to change decades of industrial and trade policies and further open up its markets to foreign businesses.
China has granted majority control to other foreign banks in their local ventures before Goldman made its move last August.
UBS Group received approval to take a controlling stake of UBS Securities China in November 2018, becoming the first foreign bank to do so for an existing joint venture, after ownership rules were relaxed in 2017.
HSBC, which has made a big bet on growth in the Pearl River Delta, became the first foreign bank approved for a new majority-controlled securities joint venture, HSBC Qianhai Securities, on the mainland in 2017.
Last year, JPMorgan Chase and Nomura Holdings also received approval to open majority-owned security brokerage ventures in China. In April, Credit Suisse said it planned to take a controlling stake in its mainland securities joint venture.
