China is planning to permit global banks to have a stake of up to 51% in their onshore securities ventures for the first time and join forces with local non-financial firms. According to sources, an official states that both domestic and foreign investors will be treated ‘equally’ when buying stakes.
If it goes ahead, the movement would initiate an integral part of China’s promise to ease foreign ownership restraints. This would allow banks such as UBS, JPMorgan, Credit Suisse and Goldman Sachs to boost their existence in securities business, from underwriting to trading, in the world’s second-largest economy.
The announcement comes shortly after US President Donald Trump called on the Chinese President, Xi Jinping, to allow American entities better market access during a “state plus” visit to Beijing.
As of today, Western banks are only allowed to own up to 49% of their Chinese securities joint ventures. Inevitably, the limited input to revenue and lack of control have consistently been cause for frustration.
The objective to ease restrictions is a result of increasing pressure on Beijing from Western governments and business lobbies to dismissinvestment barriers and demanding regulations that restrict foreign firms from operating in its markets.