Goldman Sachs, Morgan Stanley to take control of mainland joint ventures as China opens up financial sector
- Wall Street banks granted regulatory approval to take 51 per cent stakes in securities joint ventures
- UBS, JP Morgan and Nomura already won approval for control of mainland JVs under 2018 ruling
Goldman Sachs and Morgan Stanley received regulatory approval on Friday to take control of their Chinese securities joint ventures, becoming the latest foreign banks to take advantage as China opens up its financial services sector.
In separate announcements on Friday night, the American banks said the China Securities Regulatory Commission had approved their bids to own majority stakes in their securities joint ventures, Goldman Sachs Gao Hua Securities Company and Morgan Stanley Huaxin Securities.
Following intense lobbying from foreign banks, China said it would raise its cap on foreign ownership limits to 51% in April 2018. The ruling allows foreign banks to compete more effectively onshore and to integrate their mainland business with their global operations.
Goldman Sachs said it would increase its stake from 33 per cent to 51 per cent and began moving business units operating under Beijing Gao Hua Securities to one single corporate entity. The joint venture was started in 2004, but Goldman has operated in the Chinese capital markets since the 1990s.
“This is a significant milestone in the evolution of our business in China,” Todd Leland, co-president of Goldman Sachs for Asia-Pacific, excluding Japan. “We will be seeking to move towards 100 per cent ownership at the earliest opportunity.”