Citi asks to re-enter Chinese investment banking market

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Citigroup has applied for a license to launch a wholly-owned investment bank in China, three years after exiting the securities market of the world’s second-largest economy, according to a person with direct knowledge of the matter.

The Wall Street bank sold its stake in Citi Orient Securities in 2019, seven years after the joint venture was formed. The move paved the way for Citi to set up a new majority-owned company that could provide investment banking services such as underwriting debt and stocks in mainland China, but put its market progress behind. rival banks that have since increased control over their land-based joint ventures.

Citi said, “We continue to assess opportunities that will support the onshore businesses of our global and local customers. ”

Beijing allowed foreign banks to own 51% of their onshore Chinese securities joint ventures for the first time in 2017. Last year, it announced that global banks could take full control of the companies. JPMorgan and Goldman Sachs have since been approved by Chinese regulators to own 100% of their onshore securities joint ventures.

Citi will be the eighth world bank to be able to provide onshore investment banking services in China if it obtains approval to re-enter the market.

However, his rivals failed to make much money from their own entities in the country. Only three – Goldman, UBS and Deutsche Bank – have been profitable in the past three years. Companies controlled by JPMorgan, Morgan Stanley, Credit Suisse and HSBC all reported overall losses during this period.

The world’s largest investment banks have long sought the lifting of ownership restrictions on their onshore operations. Many have since announced plans for rapid expansion, in some cases aimed at doubling staffing levels and revenues.

China’s crackdown on overseas listings of its largest companies over data security concerns, following the disastrous US listing of ride-sharing app Didi in June, has forced banks global companies to place a higher priority on expanding their underwriting business on the continent.

Didi said on Friday that he would withdraw from the New York Stock Exchange and instead aim to list in Hong Kong, a growing sign of China’s control over the international strategies of its largest companies.

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