Credit Suisse is poised to take majority control of its Chinese investment-banking joint venture, the second major international lender to do so as the country opens up its financial sector to overseas competition.
The Swiss bank has reached an agreement with partner Founder Securities to increase its stake in their joint venture to 51 per cent from 33.3 per cent, a previous limit for non-Chinese companies, by way of a capital injection of about SFr94m ($94m), according to statements from both parties on Monday. The deal still has to be approved by regulators, expected in August.
Credit Suisse follows local rival UBS, which won approval from regulators to take a controlling stake in its own joint venture in December. The presence of another international bank onshore in China shows the eventual success of a decades-long lobbying campaign in Beijing, which argued the country’s nascent capital markets would benefit from foreign investment and expertise.
Despite numerous setbacks, pressure has recently built on China’s top leadership to open their markets if they expect reciprocal treatment overseas. Regulators vowed to speed up the process and a year ago gave clearer time frames for allowing banks, securities companies, asset managers and insurers to take full ownership of their local operations.
Of other international banks, only HSBC has been granted permission to take a 51 per cent stake in a national-level securities joint venture, taking advantage of special rules for Hong Kong-funded institutions. JPMorgan and Nomura have received permission to expand, but have not yet reached agreements with other shareholders to acquire majority stakes. Goldman Sachs and Morgan Stanley have said they are considering similar moves.
