Two Foreign Banks Apply for Controlling Stakes in Joint-venture Securities Companies


Two overseas financial institutions have submitted applications to obtain control of joint-venture securities companies in China following the lifting of ceilings on foreign ownership at the end of April.

The official website of the China Securities Regulatory Commission (CSRC) has confirmed that Nomura Holdings submitted an application for the establishment of a foreign-invested share controlled securities company on 8 May.

Swiss-investment bank UBS previously submitted an application to CSRC on 2 May to obtain a controlling stake in its Chinese joint-venture, UBS Securities, by lifting its equity share to 51% from 24.99%.

The “Foreign Invested Securities Company Administrative Measures” (外商投资证券公司管理办法) were officially launched on 28 April, accelerating the opening of China’s financial sector by lifting foreign ownership restrictions for domestic securities firms.

The new measures not only permit foreign investors to obtain controlling stakes in joint-venture securities companies, they also expand the scope of permitted business operations.

Regulators hope that this will help to import the experience and professional capability of overseas financial institutions, and thus expedite the development of China’s securities industry.

Nomura has become the first overseas financial institution since the launch of the new Measures to apply for the establishment of a foreign-invested securities company, drawing considerable attention amongst China’s domestic investor.

According to domestic analysts joint-venture securities companies were previously subject to quite strict regulation, with most of their business activities confined to investment banking, and foreign shareholders unable to obtain controlling stakes.

China’s first joint-venture securities company, China International Capital Corporation, was established in 1995, while there are currently a total of 12 joint-venture securities companies operating in China, including UBS Securities, Goldman Sachs Gao Hua, Tebon Securities and Morgan Stanley Huaxin.


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