JPMorgan plans China securities firm

As part of opening-up, US bank applies to securities regulator, would hold 51%

JPMorgan Chase is planning to further grow its onshore business capabilities in China to cash in on the country's plan to widen foreign access in the financial sector.

The Corporate & Investment Bank of JPMorgan Chase has submitted an application to China's securities regulator, seeking to establish a new, fully integrated securities company in which it would hold a 51 percent stake, increasing to 100 percent as allowed by regulations over the next few years, the company said on Monday.

The bank's asset & wealth management business is also pursuing its desire and intent to increase its current joint venture stake in China International Fund Management Co Ltd to a majority interest, subject to agreement with its joint venture partner and the relevant authorities.

The US bank also said it is looking to double its research coverage of China-listed companies across all sectors, and that it has appointed banking veteran Mark Leung as chief executive of its China business.

The application is a step toward JPMorgan's return to the securities business in China, having sold its 33 percent holding in a similar venture to its local partner in 2016.

JPMorgan did not disclose who would own the remaining 49 percent of the new venture. However, it said it would raise its ownership to 100 percent if eventually permitted.

China in April said it aims to raise foreign ownership limits in securities, fund management and futures firms to 51 percent. The announcement came as the US and other trading partners complain of unfair limits on competition.

"These developments are important for China, the US and global commerce, and an encouraging sign for the world's two largest economies," JPMorgan Chief Executive Jamie Dimon said in the statement.

In the past, Western banks could only own up to 49 percent of Chinese securities joint ventures. The lack of control and limited contribution to revenue have long been a source of frustration.

JPMorgan joins other foreign banks including Nomura Holdings Inc and UBS Group AG, which have taken steps in China to set up majority-owned securities businesses, which typically provide broking and underwriting services.

So far, only HSBC Holdings PLC has received permission to set up a majority-owned securities joint venture in China.

CHINA DAILY — REUTERS