HONG KONG (Reuters) - Citigroup Inc (C.N) plans to set up a wholly-owned securities business in China, people with knowledge of the matter said on Tuesday, taking advantage of Beijing’s move to fully open up some of its financial sectors to foreigners next year.
Citi is currently in the process of completing its exit from a minority-owned securities joint venture in China, a process that one of the sources said is expected to be completed by end of this year.
The exit, which was first announced late last year, was seen as paving the way for the U.S. bank to set up its own brokerage in the world’s second-largest economy.
Citi’s plans to set up a wholly-owned securities business in China are in the early stages, said the sources, who declined to be identified due to the sensitivity of the matter. Bloomberg first reported the development.
“Citi continues to evaluate opportunities to further support its clients in China,” a spokesman for the bank said in an emailed statement, declining to give details.
Global investment banks are currently able to own up to 51% of their China operations. That requires a joint venture with local Chinese partners. Beijing has pledged to ease foreign ownership limits in the financial sector over a period of time.
Last week, China announced a firm timetable for opening its futures, brokerage and mutual fund sectors fully to foreign investors next year, the latest step to deregulate the country’s trillions of dollars worth of financial industry.
Limits on foreign ownership of securities firms will be removed on Dec. 1, 2020.
The China Securities Regulatory Commission will start taking in applications in the second quarter of 2020, and plans to give at least couple of licenses for wholly-owned securities business by end of the year, said a source with knowledge of the plans.
Citi, which has a large retail and corporate banking presence in China, will become one of the first foreign banks to set up a wholly-owned securities business in China, if the plans are finalised.
French lender Societe Generale (SOGN.PA) has also ditched a plan for a securities joint venture in China in favor of a wholly-owned subsidiary, a senior executive of the bank said over the weekend.
Reporting by Sumeet Chatterjee, editing by Louise Heavens