The China Securities Regulatory Commission (CSRC) has granted Standard Chartered (SC) in-principle approval to set up a securities firm in Mainland China, following the country’s lift of ownership restrictions for foreign financial institutions in 2020.
Foreign banks present in China’s securities market via joint ventures (JV) were quick to increase their shareholding above 50% after the rules were eased. In August 2021, JP Morgan became the first to take 100% ownership of the securities firm that it had set up as a JV with Shanghai International Trust Corp in 2004. Goldman Sachs followed suit, in October 2021.
SC will be the first bank to set up a wholly foreign owned securities business via greenfield investment, read the announcement distributed to media last week. SC will make an initial capital injection of RMB1.05 billion ($154.7 million).
The new securities firm will be based in Beijing and will offer underwriting, asset management (restricted to asset-backed securities), own-account trading and brokerage services for both onshore and offshore clients.
The bank announced its appointment of John Tan, head of financial markets for Asia, as chair-designate of the new firm, and Grace Geng as CEO-designate. Geng’s LinkedIn profile shows that she was appointed by the bank in August 2021 as part of the setup project.
SC’s CEO for Asia, Benjamin Hung, said in the media release that the firm was “confident of the continued opening of financial markets in China,” and “very positive about the country’s development prospects, in particular the promising investment value of the onshore capital markets and the growing attractiveness of renminbi assets in offshore markets.”
Jerry Zhang, who serves as executive vice chairman and CEO for China, and cluster CEO for China and Japan, added: “As China continues to open up its capital markets rapidly, the importance of Chinese assets in the global markets keeps growing while the efficiency of its resource allocation is also improving.”
London-headquartered SC Bank set up its first China branch in Shanghai in 1858. In its 2021 annual results report, the bank announced plans to invest $300 million over three years in China-related businesses to help clients address opportunities emerging from China’s opening up, including currency liberalisation, the Belt and Road initiative, the Greater Bay Area (GBA), onshore capital markets, and mainland wealth.
A spokesperson for SC declined to comment beyond the release.
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