Hong Kong-based investment bank China Renaissance has won regulatory approval to set up a brokerage business, joining a resurgence in applications for mainland securities licences by global banks after a decade of disappointment in the market.
China allowed global investment banks to establish joint ventures with domestic partners between 2004 and 2007, before shutting out new entrants at the onset of the global financial crisis.
However, the joint ventures have often been lossmaking, with foreign banks citing a lack of control for poor performance.
announced last year that it had applied for a brokerage licence that would give it a majority stake in a new securities company.
and Hong Kong-based Bank of East
Asia followed with similar plans.
Those banks have sought to distance themselves from the first generation of joint ventures, saying the forthcoming licences have done away with many of the original pitfalls.
HSBC’s joint venture, if approved, would make it the first foreign company to have a majority stake in an onshore brokerage. Shenzhen Qianhai Financial Holding, which holds the minority stake, is expected to be a silent partner.
HSBC hopes the agreement will allow it to build its own broking business on the mainland without interference.
’s new licence will allow its joint venture with Founder Securities to expand into securities broking on top of the equity deals and corporate bond underwriting it already does.
China Renaissance will have licences for underwriting, securities broking, investment advisory and asset management, according to chairman and chief executive Fan Bao.
The bank will hold a 49 per cent stake in the company, called Huajing Securities, but will have day-to-day control. The bank’s as yet unnamed partners in the venture, to be based in Shanghai, will be one media and one technology company from the mainland.
While the second round of licensing attracts applicants, the failures of the original ventures are hard to ignore. Most have struggled to cover their costs.
“By and large, it really didn’t work out,” Mr Fan said of the original joint ventures. “The regulatory environment and the clients are so different?.?.?.?the way they manage China is still more or less like a satellite office. In order to do well in China, you have to localise.”
如获批准，汇丰的新合资公司将使其成为首家在内地证券公司中占多数股权的外国公司。预计持有少数股权的深圳市前海金融控股有限公司(Shenzhen Qianhai Financial Holding)将是一个不参与管理经营的合作伙伴。