Big Lenders to Raise China Stakes -- WSJ
January 09 2017 - 3:02AM
Dow Jones News
By Julie Steinberg
HONG KONG -- Morgan Stanley and UBS Group AG are planning to
increase their stakes in their investment-banking operations in
mainland China, in a sign of commitment toward developing more
business in the country, people familiar with the matter said.
Foreign banks operating in China must pair with domestic
brokerages in joint ventures. The joint ventures can advise on
mergers and acquisitions and underwrite initial public offerings,
though most don't have licenses to trade securities.
Both Morgan Stanley and UBS are planning to increase their
stakes in their joint ventures to 49%, the highest threshold
permitted by Chinese authorities, people familiar with the plans
said. Morgan Stanley currently owns 33.3% of its joint venture and
UBS 24.99%.
Morgan Stanley is expected to raise its stake in the next couple
of months after it secures regulatory approval, while UBS is hoping
to complete its plan within the year, the people said.
Global banks were initially allowed to own no more than
one-third of the joint ventures, a threshold that was raised to 49%
in 2012.
Most banks haven't bumped up their stakes, with many bankers
saying that revenues earned from a larger stake wouldn't be worth
the hassle. But people familiar with the banks' current plans say
the move is a sign of good faith to the Chinese government that the
banks intend to stay there and have confidence China will open up
over time and offer opportunities. Gaining full access to Chinese
markets has been a longtime dream of global banks in Asia.
Bankers have been frustrated over not owning their businesses
outright. Global banks have disagreed with local partners over
their strategic priorities, and have also fought over head count
and compensation.
Under a U.S.-China trade and investment framework discussed last
year, Beijing was considering allowing Wall Street firms to run
their own investment-banking businesses on the mainland, The Wall
Street Journal reported in November. But a person briefed on the
discussions says it is unclear whether that potential treaty will
move forward under President-elect Donald Trump's
administration.
Bankers see getting to 49% one more step toward gaining eventual
control of their operations on the mainland, people familiar with
the matter said.
Write to Julie Steinberg at julie.steinberg@wsj.com
(END) Dow Jones Newswires
January 09, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
UBS (NYSE:UBS)
Historical Stock Chart
From Aug 2024 to Sep 2024
UBS (NYSE:UBS)
Historical Stock Chart
From Sep 2023 to Sep 2024