JPMorgan Asks For Full Stake In Chinese Securities Venture

JPMorgan Asks For Full Stake In Chinese Securities Venture

June 03, 2021 at 05:34PM

J.P. Morgan Chase is seeking regulatory approval to obtain full ownership of its securities joint venture in mainland China.

As Reuters reported on Thursday (June 3), the bank owns 71 percent of the venture following the buyout of one of its business partners in October 2020. A 100 percent stake in the venture would put J.P. Morgan in the company of Goldman Sachs, which is also working to take full control of its business in the Chinese mainland.

“Securities joint ventures in China typically house investment banking, equities sales, research and fixed income divisions, and most of the foreign banks are keen to increase their stakes in the business,” the Reuters report stated. “Beijing scrapped foreign ownership limits in the securities and mutual fund industry on April 1 last year.”

The article noted that full ownership could allow J.P. Morgan and other foreign banks to expand their operations in China’s multi-trillion-dollar financial arena, while better integrating them with international businesses.

In 2020, the China Securities Regulatory Commission granted final regulatory approval to Goldman Sachs and Morgan Stanley to assume majority stakes in joint security ventures in China. The move came at a time when Beijing was working to open the country’s borders to outside business. Goldman went from owning a 33 percent stake in Goldman Sachs Gao Hua Securities to a 51 percent stake, and Morgan Stanley’s ownership of Morgan Stanely Huaxin Securities rose from 49 percent to 51 percent.

In March, J.P. Morgan Chase paid $410 million to purchase a 10 percent stake in the state-owned China Merchants Bank, the country’s leading wealth management firm. As PYMNTS noted at the time, it’s a significant move, as it was the only time a Chinese bank showed a willingness to allow foreign investors to control a wealth management subsidiary.