Goldman Applies for Majority Stake in China Joint Venture

Goldman Sachs has applied to gain clearance from the China Securities Regulatory Commission to take its holdings in Beijing-based Goldman Sachs Gao Hua Securities from 33 percent to 51 percent. If approved, the US bank would become the third global lender to take advantage of Beijing’s latest commitment to ease foreign-ownership restrictions.

UBS was the first foreign-controlled brokerage approved by the securities regulator to upgrade its ownership in a local joint venture to controlling stake since the mitigated rules were implemented in late 2017. The Swiss bank UBS applied to raise the stake in its China venture, called UBS Securities, to 51 percent, up from the previous 25 percent.

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Goldman Sachs has been discussing the offer with its partner in China, Fang Fenglei, and his associates as regulators vowed to speed up the process allowing banks, securities companies, asset managers and insurers to take majority stakes and full ownership of their local operations.

Door opens for $50 billion cake

China has repeatedly pledged to open its financial markets, including allowing foreign firms to own as much as 51 percent of their securities ventures, up from the current 49 percent ceiling.

Other global investment banks, including Morgan Stanley, also seek a controlling stake in its Chinese business under new rules. Having spent years operating with limitations, where they were not authorized to surpass a 49 percent limit, both banks also signaled a desire to take majority stakes in their Chinese ventures in order to expand their mainland’s business.

Securities firms in China, which are mostly dominated by state-owned banks, generated more than $50 billion in revenue in 2017, official data show.

Chinese President Xi Jinping said last year that the nation would accelerate the opening up of its financial sector, including measures to facilitate foreign access to the Chinese insurance industry and easing restrictions for entry and expansion of foreign financial institutions.

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